Cycles & macro
A small set of observables drives the total equity dial—no GDP precision required.
1. Four quadrants (simplified)
| Growth ↑ | Growth ↓ | |
|---|---|---|
| Inflation ↑ | Reflation early: cyclicals, resources | Stagflation: cash, short duration, staples |
| Inflation ↓ | Goldilocks: growth, tech | Deflation/recession: bonds, quality, late policy |
Update quadrant tag each quarter in the journal; late confirmation beats early hero calls.
2. Watchlist
| Indicator | What to watch | Risk-on tilt | Caution tilt |
|---|---|---|---|
| Policy rate | Up / down / flat | Early easing cycle | Late in hiking cycle |
| Credit impulse | Social financing, M1–M2 | Credit easing starts | Tight credit persists |
| PMI | Above/below 50 | Expansion streak | Contraction streak |
| Yield curve | Steep / flat / inverted | Normal steep | Deep inversion |
| Risk appetite | VIX, credit spreads, IPO pace | Stable risk assets | Widening spreads, frozen issuance |
3. Position dial (aligned with discipline)
| Signal mix (example) | Suggested max equity |
|---|---|
| Easing credit + PMI up + rates down | Upper band (70%–85%) |
| Mixed | Neutral (50%–70%) |
| Tight credit + PMI <50 + external shock | Lower band (30%–50%) |
tip
The dial is directional. Wrong once should not blow you up; unbounded leverage and thesis-free concentration are the real killers.
4. Rates cheat sheet
| Asset | Rates up | Rates down |
|---|---|---|
| Long duration bonds | Down | Up |
| Long-duration growth equity | Multiple pressure | Multiple expansion |
| Banks (typical) | NIM expectations game | Macro growth matters more |
| Property chain | Usually pressured | Policy + sales data dominate |
5. Sentiment extremes
| Phenomenon | Personal response |
|---|---|
| Uniform media optimism | Check valuation percentiles; trim L3; no leverage |
| Uniform pessimism, no new bombs | Buy per thesis in tranches—not all-in |
| Policy shock | Separate “rules changed” from “mood changed” |
Archive cases (date + view + outcome) in journal case library.
6. Quarterly macro review
- Is quadrant tag still valid?
- Which indicator surprised most? Why?
- Does total equity match environment tier?
- Next quarter: 1–2 “if … then …” scenarios