Investment environment parameters
- Economic cycle
boom
- recession
- Inflation rates
High
- Low
- Currency type
Reserved currency
- Non reserved currency
- Exchange rates regime for non reserved currency owners
Fixed exchanges rate
- Floating exchange rates
- Recession type
(hyper) inflationary
- deflationary
- Federal reserve monetary policy
restrictive
- expansive
Asset class types
Government bonds
- good position to hold when government is unlikely to default and threat of inflationary recession looms
interest rates are inflation adjusted
- high opportunity cost to hold position when economy is booming
Cash
- good position to hold when hyper deleveraging is occurring within the system and Federal reserve has not responded with expansionary monetary policy
- high opportunity cost to hold position when economy is booming
Mortgage REIT
- good position to hold when threat of deflationary recession looms and the Federal reserve have started loosening monetary policy.
- a tenuous position to hold during periods of hyper inflation because the interest gets offset by the inflation
- a tenuous position when the Federal reserve starts tightening monetary policy
- a tenuous position to hold when over leveraging is rampant within the system
- high opportunity cost to hold position when the economy is booming
Equity REIT
- good position to hold when the Federal reserve starts tightening monetary policy.
Credit becomes less available and thus more expensive
- number of construction project drops
- less supply driving up demand for existing inventory
- high opportunity cost to hold position when the economy is booming
Gold
- Use as a protection against hyper inflations
- a tenuous position when the economy is in the early stage growth
demand for gold will drop as more funds gets allocated to risk assets
- a tenuous position when the economic is heading into deflation
there is less money/credit within the system as compared to the amount of gold
Oil
- Useful for hedging against outbreak of war
- a tenuous position when recession and economic activity worldwide slows
Growth companies
- Useful for riding an economy boom
- a tenuous position to hold during the late stage of a credit cycle when too much leverage has been built up within the system and valuation is excessive
Value companies
- Useful for riding a deflationary recession when credit becomes more expensive
- High opportunity cost when economy is booming.
Related references
- *[Invest with the Fed,](https://garyteh.com/2019/09/book-summary-invest-with-the-feds-by-robert-r-johnson-gerald-jensen-and-luis-garcia-feijoo/)*[ Robert R Johnson, Gerald Jensen and Luis Garcia Feijoo](https://garyteh.com/2019/09/book-summary-invest-with-the-feds-by-robert-r-johnson-gerald-jensen-and-luis-garcia-feijoo/)
- [*Understanding Big Debt Crisis*, Ray Dalio](https://garyteh.com/2019/09/book-summary-understanding-big-debt-crisis-by-ray-dalio/)
- [List of economic crisis, wikipedia](https://en.wikipedia.org/wiki/Panic_of_1837)
- [*Manias, panics and crashes*, Charles Kindleberger and Robert Aliber](https://garyteh.com/2019/07/manias-panics-and-crashes-balance-of-trade-mechanism/)
- [*The Asian financial crisis*, Shalendra Sharma](https://garyteh.com/2019/08/book-summary-the-asian-financial-crisis-by-shalendra-sharma/)
- *The end of wall street*, Roger Lowenstein
- [*When genius failed*, Roger Lowenstein](https://garyteh.com/2019/08/key-lessons-from-when-genius-failed-by-roger-lowenstein/)
- [*The bank credit analysis handbook*, Jonathan Golin and Philippe Delhaise](https://garyteh.com/2019/07/book-summary-the-bank-credit-analysis-handbook-by-jonathan-golin-and-philippe-delhaise/)
- [*The Fate Of Rome*, Kyle Harper](https://garyteh.com/2019/05/book-summary-the-fate-of-rome/)
- [*The savings and loans crisis* by James Barth Susanne, Trimbath and Glenn Yaho ](https://garyteh.com/2019/08/book-summary-the-savings-and-loan-crisis-lessons-from-a-regulatory-failure/)
- *The Snowball*, Alice Schroeder
- *The bitcoin standard*, Saifedean Ammous