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Write a 5 page essay on Understanding how asset classes and systematic strategies behave and perform during different macroeconomic environments.Generally, the business cycle phases are distinguished
Write a 5 page essay on Understanding how asset classes and systematic strategies behave and perform during different macroeconomic environments.
Generally, the business cycle phases are distinguished by various economic changes. These economic changes characterizing the cycles may include employment changes, interest rate changes and industrial productivity. Therefore, the business cycle can be referred to a pattern of fluctuation in the GDP (Gross Domestic Product) which affects employees, investors and employers. For instance, a business cycle significantly affects investors, employees and employers who work for a living in the production of services and products, which are in demand (Black 100). The demand for more products fuels inflation and at the same time wages increases. In due time, the demand for products and services decreases as consumers view the prices as unaffordable, this in turn forces the prices to decrease and causes recession. At the end of the cycle, the demand rises as a result of the declining prices as lower prices fuel demand. Therefore, the cycle starts at the beginning once again. When the business cycle is hugely affected by economic factors and does not run smoothly, it can result in the Great depression. Hence, this is the reason behind governments drive to intervene and manage economies (Piros & Pinto 284).
Tracking the cycles assists experts in determining the direction and trends of the economy. The business cycle can be beneficial in the equity sector as it can track equity market returns over a given period from months to years (Black 100).
In a given period, the economic cycle may differ from one cycle to another. however, there are some trends, which are repetitive and thus are critical in analyzing the fluctuation in determining economic changes. The changes in the economic cycle are vital transformation in the rate of development in the market especially declining and increment in rates of growth in inventories, employment, corporate profits and
