Warning: Most of this post contains an investment strategy with a high probability of failure. Considering the spectrum between ‘safe’ and ‘volatile’ in terms of expected outcomes, this one’s off the charts. It’s not investment advice, or even a good idea.

Investments, whether in property, shares, or crypto, follow cycles, and occasionally, someone claims to have ‘figured it out’.

Some people think Raoul Pal is just ‘Taylor Swift for Crypto Bros’. I learn a lot from him though, and I wonder if the old chap may be onto something about this ‘Everything Code’.

If there’s a cycle that plays out with more volatile investments, and if you can observe it over a long time frame, it becomes more likely you’re seeing something real.

Much in the same way the power bill spikes in the winter. Sometimes markets go wild because every four years American’s choose between 2 Muppets.

Since the 2008 Global Financial Crisis and each four year period since, we observe a cycle of 4 seasons. It’s a tough one to accept I’ll admit it, because it feels like you’re being conned into timeshare learning about this this sort of thing. Let’s be open minded though.

These cycles could help us know when to hold it, and when to take some chips off the table.

The currency expansion that started to occur since 2008 follows a four-year cycle. Elections, geopolitics, technological adoption curves, and central bank policies are all unconsciously or otherwise, synched together in somewhat perfect harmony.

Here’s the essence of it:

Year One: Spring – The market begins to recover and grow.
Year Two: Summer – Growth accelerates.
Year Three: Fall – Market starts to cool down.
Year Four: Winter – The market hits a low point, often causing fear and panic.

My Angle

The rate at which new currency comes into existence feels volatile because we’re in an exponential growth curve of ‘global liquidity’. The higher highs and higher lows reveal it all.

Watch this, then keep reading:

Lessons I’ve Learnt

  • If you’re investing for a long enough timeframe, it’s reasonable to take on as much ‘risk’ as you can. This is most important during times you least feel like it.
  • You’ll always feel comfortable holding on to investments because occasionally they’ll feel worthless. Keep the investments that still make sense for the future (but hedge yourself in case the past persists!).
  • Compounding is incredibly powerful, but it tells us more about the dissolving value of our dollars, than about the ‘performance’ of an asset.
  • Fast-growing assets appear more expensive because they’re reflecting the anticipated decline in the future value of our currency.

So, What Should You Do?

Here’s a strategy that’s not financial advice:

– Take some profits occasionally: Towards the end of a high-growth year, take about a third off the table. Reduce risk, secure some gains, and enjoy life.
– Be open-minded, and act a little contrarian every other year: Use downturns to your advantage by dollar cost averaging to higher degrees from early Winter to early Spring. Don’t get stuck on the tools, focus on the build!
– Stay invested: Always keep a portion of your investment in the market to benefit from long-term growth (also forces you not to continually ‘time the market’.

So, What Are You Going To Do?

For me, the key lesson here is not to overthink it – there’s a sweet spot right in the middle where you’ve considered both sides for a while, and then you take action. It helps to find a way to be accountable too, and create the financial motivation to keep going (I’m speaking from current experience)!

What are you going to do though? If cycles are a feature of our investable universe, are you going to take action on it? Do something about this now, or chuck it in the conspiracy bucket, and let it fester with regret until you’re forced to deal with it?

Of courser there’s only one right answer here, and I don’t know what it is, so please do be careful with this one. There’s a lot at stake especially, if you’re trying to build some independence in your life. Occasionally, it feels like it’s the right time to take bigger steps. Unless you’re waiting for someone to die before you get paid (no judgement!), I wouldn’t wait around trying to get lucky doing the same thing that most of your friends are doing.

This could be a terrible idea, or not: If cycles are a feature of the market, will you use them to your advantage?

Attaching an investment strategy to 4 seasons is a risky play though – I’m not certain I’d bet the house on if I were you, mostly because I don’t know you, and partially because I don’t want to get in trouble.

Here’s the only thing I can say really: We need to remember that for things to work out great in our lives, we need to take action, and that often comes with a chance of failure.