THE BUSINESS CYCLE AS DESCRIBED BY THE INVESTMENT CLOCK
The Investment Clock was first published in the Evening Standard, London,
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
EIS takes this opportunity to thank Bruce Kirkham and David Rasmus for their assistance in putting all the cycles information together.