Show 5.15 Responding to the Business Cycle

Part of our Market Services offer is an ongoing research service. Part of this process requires a close examination of the economy to decide what forces are affecting your customers, and how will it affect their buying decisions. We combined several approaches (contained in our Business Primer) including stock picking; we built this economic cycle model.

The Economic Cycle

Based on the Wave Theory, the economy can be viewed as a series of waves with crests (tops) and troughs (bottoms) with two faces – Expansion and Contraction. When you add the economic principle of price communicating value, we divided it into 4 conditions:

• Expansion where True Value is Greater than Market Price
• Expansion where True Value is Less than Market Price
• Contraction where True Value is Less than Market Price
• Contraction where True Value is Greater than Market Price