# The Economic Clock



## stockGURU (26 March 2009)

Just wondering about people's views about The Economic Clock (see attachment). 

Do you think it accurately represents the various stages of the boom/bust cycle of capitalism?

If so, where are we on the clock and can we expect things to be the same this time? Is it all really this predictable?


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## investorpaul (26 March 2009)

Looking at the graph we have seen falling interest rates, but we really having seen real estate fall that much yet. Still based on the graph you posted we would look to be in about the 6 o'clock position. 

The question is how long will we stay there?


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## Glen48 (26 March 2009)

3 to 6 should be at 2 in the olden days R E went down Stocks went up ...we are  are joined at the hip like Siamese twins who have to go to  USA once a year so the other twin can get a chance to drive we still need USA


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## Wysiwyg (27 March 2009)

stockGURU said:


> Do you think it accurately represents the various stages of the boom/bust cycle of capitalism?




SG

Here is another representation of the cycles.Note the economic cycle "lags" the stock market cycle.Also Financials (4) at the late bear to early bull.

A post on another thread about the huge amount of cars in storage and Harvey Norman posting a 56% profit fall suggests Consumer Cyclicals (late bear 2) are still not active.

Take a look around you (neighbours, friends, shopping, sometimes newspapers, employment etc.) and quietly note any changes.Although the changes will be subtle to begin with, as the first of the herd venture out onto the plains to graze again.


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## Bill M (28 March 2009)

stockGURU said:


> Just wondering about people's views about The Economic Clock (see attachment).
> 
> Do you think it accurately represents the various stages of the boom/bust cycle of capitalism?
> 
> If so, where are we on the clock and can we expect things to be the same this time? Is it all really this predictable?




I have often wondered about the accuracy of this clock. Some say that it could be irrelevant as now governments take more action than in the past, I don't know. We would definitely have to be at just before 7, I mean it is the lowest interest rates we've had in 45 years. But as someone else has said, real estate hasn't really taken much of a hit. I would say we are at 6.45 with another 1 or 2 small interest rate cuts to come but then again who really knows.


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## sinner (28 March 2009)

We are not a minute past 3:30.

Other countries are only an hour or two ahead.

Also I think 5 and 7 should be swapped around.


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## Aussiejeff (28 March 2009)

I think the clock is broken.

I was sure yesterday afternoon it was pointing to 6.30, but this morning it has gone backwards to 5.30?

Can someone please fix it?


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## Sir Osisofliver (30 March 2009)

stockGURU said:


> Just wondering about people's views about The Economic Clock (see attachment).
> 
> Do you think it accurately represents the various stages of the boom/bust cycle of capitalism?
> 
> If so, where are we on the clock and can we expect things to be the same this time? Is it all really this predictable?





stockGURU,

Where did you get that picture?   A couple of your clock points are off  - there are better graphical representations of the concept out there.  The concept is just to show that...

a) Cycles happen 
b) Certain asset classes perform better at various points of the cycle

To answer your question of "can we expect things to be the same this time?"  you are asking a question about history, so - how is *this* time different from any *other* time? Each negative period in the history of our market is unique in terms of severity and duration, but the cyclical nature of these events is remarkably similar.

When you look at your diagram of the economic clock (Also known as the Investment Clock - first espoused by the London Evening Standard newspaper in 1937) the basic theory behind it was that each economic condition that appears on the clock *tends* to be the result of the preceeding economic condition. They naturally flow from one to the next. The share market looks crappy and starts to fall?  Money flows into Property. Interest rates are increased to combat this effect, both shares and property look rubbish, money flows into fixed interest.  Everyone hoarding their money, spending decreases, less consumption, less production, more unemployment, creates vicious circle and we head towards recession. When everyone who is going to be fired has been, employed people relax a bit more and buy those things that they put off when they thought they were going to lose their jobs (eg cars - that's why a lot of people look for new car sales as an indicator). More consumption leads to greater production which leads to greater employment, which leads to greater consumption which leads to greater production to meet demand - and the cycle continues around and around we go.

Has something fundamental happened to change this?

Look at the date the concept was introduced, they said the clock was broken in '51, '60, '72, '80, '87 - yet around and around we go, following the same path.

The concept is robust - your diagram of it?  Not a great example

Cheers

Sir O


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## SuperGlue (4 January 2013)

stockGURU said:


> Just wondering about people's views about The Economic Clock (see attachment).
> 
> Do you think it accurately represents the various stages of the boom/bust cycle of capitalism?
> 
> If so, where are we on the clock and can we expect things to be the same this time? Is it all really this predictable?





Just dusting and winding the good old Economic Clock. 
Looking at long term, time is at 6 to 8 o'clock .

We have got falling Real Estate values, Falling interests rates & now a big maybe Rising share prices.

Looks like the clock has mend itself, after all these years.

Refer to clock on orignal post #1


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## So_Cynical (4 January 2013)

Yes somewhere between 7 and 8 i would reckon.
~


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## Bill M (4 January 2013)

So_Cynical said:


> Yes somewhere between 7 and 8 i would reckon.
> ~




I go along with that too.


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## burglar (5 January 2013)

Sir Osisofliver said:


> ... (eg cars - that's why a lot of people look for new car sales as an indicator). ...
> Sir O




I heard the news today! Oh boy!?

Car sales are up ... hooray!
Locally produced car sales are down ... booo!!


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## Aussiejeff (5 January 2013)

So_Cynical said:


> Yes somewhere between 7 and 8 i would reckon.
> ~




Oh no!

Only 6 hours to another *slump*!!!


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## stockGURU (27 February 2013)

So_Cynical said:


> Yes somewhere between 7 and 8 i would reckon.
> ~




Does this clock ever start running backwards? 

It seems like this is a very cautious recovery and there doesn't seem to be a lot of optimism about the prospect of sustained economic growth.

Does anyone have a chart or table that documents how long each cycle has been in the last 100 years?


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## FlyingFox (27 February 2013)

stockGURU said:


> Does anyone have a chart or table that documents how long each cycle has been in the last 100 years?




This would be interesting but I suspect ultimately flawed as we have had so many changes in the 100 years (and virtually every decade in those 100 years) to be incomparable to any other century in history and hopefully any other century to come.

In short I don't know how much you can extrapolate from it.


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## SuperGlue (8 June 2013)

stockGURU said:


> Does this clock ever start running backwards?




We have taken one step back on the economic clock and it is out of whack.

1. Interest down
2. Falling stock market (foregin investors bailing out of Aust.)
3. Falling dollar
4. Low commodity prices

a. Interest rate & dollar down - good for the companies to invest and export, bad for retirees, good       for properties
b. Falling stock market and commodity prices - belt tightening & unemployment

My  thought are, we are heading into bad economic times, with belt tighteing, unemployment and retirees not spending, not good  for property market and companies won't invest.

As for the low dollar, good for export, but bad economic times overseas so a little improvement here.

When and if 2nd rate cut happens, hopefully the stock market will rise because of dividend chasing.

Now if RBA were to leave rates as it was, the economic clock won't be out of whack and the next is rising commodity prices.

Only time will tell......................


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## CanOz (9 June 2013)

SuperGlue said:


> We have taken one step back on the economic clock and it is out of whack.
> 
> 1. Interest down
> 2. Falling stock market (foregin investors bailing out of Aust.)
> ...




Everything seems a bit out of sync and I suspect that globalization throws a spanner in the clock too. Australia is so tied to china too. I guess there had to be a downturn sooner or later in Australia. The RBA at least has some room to maneuver...

CanOz


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## MARKETWINNER (16 June 2013)

_I believe next market cycle can start from late 2014 or beginning of 2015.

Next year is very crucial for global markets.

We cannot expect strong Australian economy over the next 18 months to two years. Probably Australian market can slow down during next 18 months. 

Both Australian dollar and New Zealand dollar could fall to a level not seen in about three years in the next few months.

In June 1998, Australia's economy was growing at 3.9 per cent and, yet the Aussie dollar could buy only US58.
In mid-June 2006, the Aussie dollar traded at US73 ¢. During this time government had surpluses, unemployment was low and we had an equities boom.

Australia didn't undergo a recession during the global financial crisis. Growth is now slowing sharply. GDP grew 0.5% in the first quarter and is expected to rise less than 1% over the next year.
The peaking of the mining cycle also will affect Australian economy. I believe at least three, and possibly four, more cuts are coming over the next six to eight months.

However there will be opportunities in some sectors in Australia and New Zealand even in the current challenging climate.

By end of next year we will be able to get some assessment on global economy trend including Chinese economy.

It is time to study market cycles, next most bullish stocks, commodities, sectors and markets and take positions accordingly. 

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions._


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## baby_swallow (7 August 2013)

Where are we on the Economic Clock  I'm confused
Real Estate prices are at the top of the boom.
Share prices are near all time high.
Yet the RBA has been cutting rates to an all-time low.


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## Knobby22 (7 August 2013)

I think we are at 8 now.


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## ROE (7 August 2013)

The only clock I have is the one that tell me time.
I buy when the price is right at any time -

Financial Engineering always try to simplified investment and money products so that they can teach it
as science and human like standards and formular something they can reference in a simple way...

Pschology, greed and fear make up more than half of that so putting it into a clock or fomular can be tough -


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## Country Lad (7 August 2013)

baby_swallow said:


> Where are we on the Economic Clock  I'm confused




3 o'clock........   

and 7 o'clock......

and 12 o'clock.

Our economy the way it is, and the way the other economies are affecting us and the movement of commodities, I think we can safely say the clock is broken at the moment.

Cheers
Country Lad


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## Buckfont (7 August 2013)

This is the clock............:cuckoo:


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## CanOz (7 August 2013)

Buckfont said:


> This is the clock............:cuckoo:


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## Aussiejeff (7 August 2013)

Knobby22 said:


> I think we are at 8 now.




Except...for some unknown reason, the clock has mysteriously started to run backwards towards 6 o'clock at an alarming rate. Financial market mechanics are rushing to fix the clock before a meltdown occurs...

"Tock..tick..tock..tick..."


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## skc (7 August 2013)

baby_swallow said:


> Where are we on the Economic Clock  I'm confused
> Real Estate prices are at the top of the boom.
> Share prices are near all time high.
> Yet the RBA has been cutting rates to an all-time low.




I think the clock needs different international time zones.


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## greggles (25 October 2018)

So where are we on the Economic Clock, and is the clock still working?


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## willy1111 (25 October 2018)

greggles said:


> So where are we on the Economic Clock, and is the clock still working?
> 
> View attachment 89988




A lot of lenders put up home loan rates in the last few months although the RBA rate remained unchanged. There is a lot of speculation rates will continue to rise. So maybe 1 o'clock.

Oh, after today the ASX is 12.5% down from its recent high a few months ago. So maybe it's 2 o'clock.

Oh, and with the Royal commission and APRA clamp down, it is definitely harder to get a home/investment loan, and the maximum borrowing capacity has been curtailed significantly. So maybe its 5 o'clock.

Oh and there are calls for property to drop 40%. It is reported Sydney values are off 5% and John McGrath feels they are currently off closer 10-15% they just haven't flowed through to the stats yet.  So maybe it's 6 o'clock.

So maybe somewhere between 1 and 6 o'clock. Although I don't think there is quite enough doom out there in the media as yet, so maybe we are a fair way off 6 yet?


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## greggles (25 October 2018)

I think we're around 2 o'clock but because so many Australians are mortgaged to the hilt we haven't seen rising interest rates. The RBA knows that raising interest rates in an environment of softening real estate prices would lead to an economic disaster.


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## Craton (9 June 2022)

With the RBA on the upward ratchet cycle, I'm reminded of "the clock".

Seems the markets have been swinging (or trying to) between the 7 to 12 sweet spot on the clock. So, has the bubble burst and are we now at 1pm and into the start of yet another cycle?

With the RBA's raising interest rates, imperialist events offshore, food shortage/supply issues, rising energy/commodity costs and the plethora of demands on the hip pocket, it's hard to juggle but that Sell signal sure looms big and strong on the horizon.


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## Dona Ferentes (10 June 2022)

And then I come across this quote, written by a person who says he's an optimist.



> "_Look at the stock market—but in terms of time, not price. The stock market goes up roughly 80%–90% of the time. There have been some big bear markets, each lasting a couple of years. But the history of our capital markets is dominated by periods where stocks go up for 10 years or more. From 1969–1982, the last inflationary period, stocks more or less went sideways, with one big bear market in 1974...... _






> _"Maybe we are setting up for 10 years of stocks going nowhere, where valuations compress, and at the end of it, when we finally revert to pro-market policies, we will be on the cusp of another great bull market. _"




That's fine , apart from the high possibility it's 1973 again!


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