Climbing To the Top- Investment Cycle

Investment Cycle

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Today we have a message from: Money

Gold hits new peak as the Fed cut rates

Following a bold 50 basis point rate cut by the US Federal Reserve, spot gold reached a peak of 2,687 per troy ounce. Experts predict that this bullish trend for the precious yellow metal may continue, so it may be smart to get in now before prices keep climbing.*

*The information provided in this email is for educational purposes only and is not intended as investment advice.

Investment Cycle

  • The chart below illustrates a typical investment cycle.

  • As reported multiple times in this newsletter, various long-term valuation metrics indicate extreme market valuation, some with a century-long record. I will post the Buffet Indicator again soon (the most recent update).

  • The market can be described as Expensive and is also approaching the peak of the dominant 3.5-year cycle (see my X post below). 

  • However, the market might have some more bullish underpinning, possibly producing a blowoff top.

  • How is an investor to approach the market in situations like this?

  • A prudent strategy is to gradually raise cash on the short-term rips and prepare for inevitable market selloff when long opportunities arise (see Cheap in the diagram below).

  • Long-term investors need to play a “patience” game, both on the way up and on the way down.

  • Consider following me on X (former Twitter) in addition to the newsletter, as I often post valuable information there in real time between the newsletters.

  • For example, I posted the 3.5-year cycle on Sunday in NDX. 

  • The 3.5-year cycle was discovered a century ago by Khitchin and has been studied and followed by many famous economists and cyclists since.

  • This NDX cycle should peak within the next several weeks and give rise to a weak NDX into 2026. I previously posted the same cycle for several major stocks and some other stock market indexes.

  • The precise market peak is determined by multiple, sometimes many, cycles.

  • The impact of multiple cycles, as determined by the cycle composite, provides more accurate peak or trough estimates.

  • However, one should not make investment decisions based solely on long-term cycles or cycles alone. 

  • In the premium newsletter, we track cycles on multiple time scales. To precisely determine potential tops, bottoms, or reversals, we supplement cycle analysis with technical and Elliott Wave analysis to optimize buy-and-sell decisions in diverse financial markets.

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