We invest in established, highly profitable, large-cap companies that dominate their industries. The Good, the Bad, and the Business Cycle Companies have their ups and downs just like you and me. Their mood swings are commonly referred to as business cycles. Last week, I suggested that Rule Maker contenders be kept out of the ring until they have seen a complete business cycle. Boy, did I open up a can of worms with that one.
Business cycles are about as easy to nail down as a grasshopper on amphetamines.
Excluding the cycle we are in now, which is 123 months long and still going, the post-World War II era cycles have averaged 61 months. Pulling out my whiz-bang HP 12C because I definitely don't have enough fingers and toes, I see that 61 months is one month longer than five years. Postwar expansions have averaged 43 months while contractions averaged a mere eight months. Unlike me, as our country ages, its hangovers are getting shorter. Got me, but it looks like proof that our economic watchdogs are getting better at their jobs.