The Investment Clock was first published in the Evening Standard, London, in 1937.

Overview

The economy runs in identifiable cycles, shown as a 12 hour clock. But whilst a clock is an instrument of precision, economics is not. The investment clock can however be a useful guide, and this site explains what the times on the clock mean. This clock not only tells the time but also the place - the time and place to invest. With this information, you can use the hands of the clock to arm yourself.

Each complete cycle runs about 8 to 11 years. In general, it takes more time to climb from 6:30 to 12:30 (5 to 8 years) than to fall from 12:30 to 6:30 (2 to 5 years). Each point in the clock shows trends in various economic indicators, such as share prices, real estate prices and interest rates, but does not show the depth of those trends. For example, one cycle might see interest rates increase sharply, another cycle may only see a small percentage increase.

The labels at the top and bottom of the clock are also relative. The Top of the Boom may just be a gentle peak or a sharp rise; the Depth of Depression could be a mild downturn or as bad as the depression of the 1930's. With a little understanding of Henry George though, and a reading of some of his books, you will be able to gauge the severity of the downturn that must inevitably follow the boom. This is because the severity of the business cycle ups and downs is determined by the extent to which community laws permit the speculation in government granted licences and privileges; most often, but not always, in land value. The latest 1990's peak was a result of easy credit policies and overbidding for spectrum - so called 3rd Generation spectrum mainly.

Charles Kindleberger, in the opening line to his excellent book, Mania's, Panics and crashes, a history of financial crises, states that "financial crises are associated with the peaks of business cycles". So our EIS clock represents also a study of history, a knowledge of which will help you comprehend, indeed, quite accurately forecast, future business conditions. You can be assured that the future will repeat the past. This is because the future, unless we change our thinking, will still be based upon the expansion of bank credit, created out of thin air, to finance speculation in the capitalised value of government granted licences and privileges, a value not backed by the productive activity of the nation.

"Here is the moral of all human tales,
'Tis but the same rehearsal of the past;
First freedom and then glory; when that fails
Wealth, vice, corruption, barbarism at last,
And history, with all her volumes vast,
Hath but one page."
        from the poet Byron "Childe Harold"

To gain a deeper understanding of the turning of the investment clock, and corresponding ability to improve your investment returns, attending the EIS Mastering Wealth (business and investment cycles timing) class is recommended.

EIS takes this opportunity to thank Bruce Kirkham and David Rasmus for their assistance in putting all the cycles information together.