A new study offers encouraging results for a strategy of monitoring the business cycle as a tool for enhancing investment returns (or at least limiting losses). “Over the period 1970-2015, investment returns were enhanced by merely knowing concurrently whether the economy was in a state of expansion or contraction, and making the most basic asset allocation decision of whether to be in stocks or bonds,” write a trio of professors in a recent paper (“Does it Pay to Forecast the Business Cycle? A U.S. Update and an International Perspective”).
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