In investing, as in life, timing can be everything.The cycles of the capital markets are as immutable as are the seasons of the year. Those who commit risk capital while the cycle is enjoying its risk-on spring will prosper; those who avoid risk-taking during the spring would be well advised not to do so as the autumn chill approaches. Shockingly, as critically important as it is to take the measure of financial and economic cycles, there is precious little insight offered in terms of understanding what drives them. The ability of our institutions to forecast, much less control, cycles has been exceedingly poor. Need proof? Inspect the pronouncements of our high priests and priestesses of finance at the Federal Reserve. In June 2008 - three months before the failure of Lehman Brothers and the takeover of Fannie Mae and Freddie Mac - the Fed expressed its concern over rising inflation and reiterated its expectation that growth would continue.
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