GDP and Business Cycles
The economy is a breathing organism; expansion is inhalation, and recession is exhalation. No organism can hold its breath forever.
Here we analyze Gross Domestic Product (GDP), the fundamental gauge of macroeconomics, and the resulting cyclical economic fluctuations. GDP is the aggregate invoice of the total value produced by a nation. For an uninitiated mind, it must be understood that growth is not merely making money, but the volumetric expansion of the economic pie.
Cycles represent the mandatory contractions that follow every expansion. Recessions are not disasters, but rather a purification phase where weak and inefficient capital within the system is liquidated. Capital allocation is shaped by which phase of the cycle you are currently in. While risk appetite surges during expansion phases, cash and safe havens serve as shields during contractions. Reading the market essentially begins with accurately predicting the clock of these phases.
