Macroscopically speaking, circulation is a very interesting thing. The famous cycles are Merrill Lynch Clock and Campo Cycle (the master of Campo Cycle is Zhou Jintao). Learning cycle theory can help us to establish a macro perspective of investment, avoid short-term chasing up and down, and form a more mature investment mentality. Therefore, learning and understanding the cycle theory is a meaningful and valuable topic.

Merrill Lynch investment clock is a strategy to invest in the economic cycle.

I, "economic downturn, inflation downturn" constitutes a recession stage. In the recession stage, the pressure of inflation (CPI) decreased, and the monetary policy (accrual) relaxed and cut interest rates, with the most outstanding performance of bonds. With the expectation that the economy is about to bottom out, the attractiveness of stocks is gradually increasing. GDP↓

Two. "Economy goes up, inflation goes down" constitutes the recovery stage, inflation (CPI) continues to decline, monetary policy (accrual basis) is loose, and corporate profitability is improved. At this stage, because stocks are more elastic to the economy, they have obvious excess returns compared with bonds and cash; GDP↑

Three. "Economy goes up, inflation goes up" constitutes the overheating stage. At present, the rise of inflation (CPI) increases the opportunity cost of holding cash, and the possible interest rate increase policy of monetary policy (accrual) reduces the attractiveness of bonds, and the allocation value of stocks is relatively strong, while commodities will obviously take the bull GDP =;

IV "economic downturn, inflation upward" constitutes stagflation stage. In the stagflation stage, inflation (CPI)↑ keeps rising, monetary policy (accrual) ↑ The central bank keeps raising interest rates, the capital cost of enterprises increases, and the oil crisis appears (the prices of resources and means of production are too high). Only a sharp rise in the unemployment rate can break the deadlock, GDP↓? It is wisest to hold cash. The impact of economic downturn on corporate profits will have a negative impact on stocks, and the yield of bonds relative to stocks will increase.

I recession: bonds > cash > commodities; Inventory > commodities

Second, the recovery rate: stocks > bonds > cash > commodities.

Ⅲ overheating: commodities > stocks > cash/bonds

Stagflation: cash > bonds > commodities/stocks

Huatai securities had an analysis before (the overall framework of real estate research: how Merrill Lynch clock is applied to real estate investment). The self-drawn version is as follows:

I, "economic downturn, inflation downturn" constitutes a recession stage. In the recession stage, the pressure of inflation (CPI) decreased, and the monetary policy (accrual) relaxed and cut interest rates, with the most outstanding performance of bonds. With the expectation that the economy is about to bottom out, the attractiveness of stocks is gradually increasing. GDP↓？ How about commercial real estate?

Two. "Economy goes up, inflation goes down" constitutes the recovery stage, inflation (CPI) continues to decline, monetary policy (accrual basis) is loose, and corporate profitability is improved. At this stage, because stocks are more elastic to the economy, they have obvious excess returns compared with bonds and cash; Left-hand transaction area of GDP residential property

Three. "Economy goes up, inflation goes up" constitutes the overheating stage. At present, the rise of inflation (CPI) increases the opportunity cost of holding cash, and the possible interest rate increase policy (accrual) of monetary policy reduces the attractiveness of bonds, and the allocation value of stocks is relatively strong, while commodities will obviously take the lead in GDP. The area of buying and selling rights of residential real estate has gradually formed an upward trend.

IV "economic downturn, inflation upward" constitutes stagflation stage. In stagflation stage, inflation (CPI)↑ keeps rising, monetary policy ↑ the central bank keeps raising interest rates, the capital cost of enterprises increases, and the oil crisis occurs (the prices of resources and means of production are too high). Only when the unemployment rate rises sharply can we break the deadlock, GDP↓ is the wisest, and the impact of economic downturn on corporate profits will have a negative impact on stocks. Sale of residential property

The above are just study notes, not as a basis for operation. At present, the author has counter-cyclical operation.

TODO: The second #F040 cycle theory (the second) is mainly about Compaq cycle.