1, "the economy goes up and inflation goes down" constitutes the recovery stage. At this stage, because stocks are more elastic to the economy, they have obvious excess returns compared with bonds and cash;

2. "Economy goes up, inflation goes up" constitutes an overheating stage. At present, rising inflation increases the opportunity cost of holding cash, and the possible interest rate hike policy reduces the attractiveness of bonds, and the allocation value of stocks is relatively strong, while commodities will obviously go bullish;

3. "Economic downturn, inflation upward" constitutes stagflation stage. Stagflation stage, the cash yield rises, and 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;

4. "Economic downturn, inflation downturn" constitutes a recession stage. In the recession stage, inflation pressure drops, monetary policy relaxes, and bonds perform most prominently. With the expectation that the economy is about to bottom out, the attractiveness of stocks is gradually increasing.

China market:

Through the test of historical data, we can find the effectiveness of Merrill Lynch investment clock in China's fund market. In different stages of economic cycle, there are a class of funds that outperform the market index, and most of the time, such funds with obvious advantages are in line with the description of investment clock, which has certain guiding significance for our investment funds.