Everything You Need to Know About Market Cycles
Big Picture Risk
Why Market Cycles Matter More Than Ever
Markets don’t move in straight lines. They move in cycles — periods of expansion, euphoria, stress, and repair. If your portfolio is designed as if every year looks like the last ten, it may be quietly taking on more risk than you realize.
I believe we are late in a very unusual cycle — one shaped by years of near-zero interest rates, massive money creation, and valuations that have drifted far from the underlying economy. That doesn’t mean the world is ending. But it does mean this is a dangerous time to ignore the cycle you’re actually living in.
Markets Don’t Forget the Past – They React to It
Most traditional retirement projections quietly assume that markets deliver a smooth “average return” over time. Real life doesn’t work that way. Returns are clumpy. You get good years and bad years — sometimes in violent clusters — and the order of those returns matters a great deal.
A typical market cycle often includes:
- Expansion – easy money, rising confidence, and steadily climbing prices.
- Excess – valuations stretch, speculation rises, and people forget that risk exists.
- Correction or reset – prices fall, leverage unwinds, and confidence evaporates.
- Recovery – opportunities appear, long-term investors who kept their discipline are rewarded.
Where you are in that sequence when you retire — or when you need your capital — can have a far bigger impact than any “average return” on a chart.
What Makes This Market Cycle So Unusual
Every cycle is different, but some have more in common with each other than others. This one is marked by:
- Years of suppressed interest rates and aggressive stimulus that pushed asset prices to levels that are hard to justify by fundamentals alone.
- Inflation that has already damaged purchasing power, even if it has cooled off from its peak.
- Debt and leverage baked into the system, from governments to corporations to households.
When a cycle is built on cheap money and rising leverage, the transition to a world of higher rates and higher costs is rarely smooth. It’s often in those transition periods that long-term portfolios face their most serious tests.
Why Market Cycles Matter So Much If You’re Near or In Retirement
For someone in their 30s, a deep bear market is painful but often survivable. There’s time to rebuild. For someone in their 60s or 70s, experiencing a large drawdown early in retirement can permanently alter what the rest of life looks like.
- Sequence-of-returns risk means that poor returns in the early years of retirement can matter far more than poor returns later on.
- Withdrawals during deep market declines can lock in losses and reduce the future growth potential of your portfolio.
- A plan that ignores the reality of where we are in the cycle may look fine on paper but be fragile in the real world.
This is why I believe cycle awareness is not optional for retirees — it’s foundational.
How I Build Market Cycles Into the Way We Invest
In my practice, I don’t pretend to know the exact top or bottom of any market. What I do is use a cycle-aware framework to guide risk decisions, so we’re not investing in a vacuum.
- We monitor valuations, credit conditions, and macro signals to understand whether the environment is becoming more fragile or more attractive.
- We adjust the level of risk in portfolios — not every week, but when the cycle clearly shifts — instead of staying fully exposed in all seasons.
- We think in terms of defense during late-cycle excess and offense after major resets, when high-quality assets can be bought on far better terms.
You don’t have to be a trader to benefit from this. You simply need a process that refuses to treat every moment in markets as identical.
What This Means for Your Plan – In Plain English
Market cycles aren’t just something for Wall Street strategists to talk about on television. They show up in real life as:
- Whether your retirement income still feels comfortable when markets get rough.
- Whether you feel forced to “hang on and hope,” or whether you can act from a position of strength.
- Whether a major reset feels like a disaster — or a chance to improve your long-term outcome.
My work is about helping you recognize where we are in the cycle, how much risk you’re really taking, and what can be done to make your plan more resilient without abandoning growth.
A Conversation About Where We Are in the Cycle
If you’re unsure how exposed your portfolio is to the current stage of the market cycle — or whether your retirement plan is built for the environment we’re actually in — this is a good time to talk.
I’d be glad to take a clear, honest look at your situation and walk through how cycle-aware planning could apply to your assets, your goals, and your timeline.
Reach out to us todayYou can’t control where we are in the market cycle. But you can control how you respond to it — and whether your plan is built with that reality in mind.