A Viking’s View of Economic Cycles
The storm is worse than expected. Another cold wave cascades over the bow of your ship. The wind blows relentlessly as your body feels the chill. You call out to your brothers to ensure they are still aboard. They call back. You smile, only to be knocked back down by another rogue wave.
But there is no time for fear, for fortune awaits.
An unusually short winter has given rise to early spring. And for a few short weeks, your enemies will be vulnerable. So you will be throwing every bit of effort you have and risking it all on capitalizing on this once-in-a-lifetime opportunity.
Your axes are sharped, your boats full of men, and despite the storm, the timing couldn’t be better. As the rain pours down, you thank the gods for the chance to raid, for this will be maybe the greatest raid of your entire life. Sagas will be sung, runes will be carved, and tales of your victory will be told for generations.
Viking Economic Cycles
Viking believed in cycles. Birth, life, death, followed by new birth, spawns new life and ultimately allows for death, beginning the cycle again. This concept is well ingrained in the world of Vikings.
A Viking views economics the same way. There are periods where kingdoms are rich, empires expand, and the raids are always profitable. And then, there are periods of decline, bankruptcy, war, and death. This endless cycle of economic life and death is known as the Economic Cycle, and is key to understanding Viking investing strategy.
The Viking Financial Warrior is part saver, part risk-taker, and part future, planner. Whether it’s flipping used cars on the Facebook Marketplace, jumping into cryptocurrency during a bull run, or starting your own dropshipping business, A Viking Financial Warrior will invest their resources anywhere profit can be found.
A Viking Financial Warrior doesn’t choose when an opportunity comes. Circumstances far beyond your control will result in tremendous opportunities to secure wealth for you and your future generations. Seizing the opportunity, wherever it presents itself, is the chief hallmark of the Viking Financial Warrior Class.
The 4 Main Economic Cycles
The goal of the Viking Financial Warrior is to be able to identify a cycle and act according to the cycle you are in. An economic cycle is defined as the fluctuation between periods of expansion (growth) and contraction. (recession) Factors that make up the cycles are gross domestic product (GDP), interest rates, total employment, and consumer spending.
There are many different cycles that a Viking can base their investment strategy on. For example, you can base them on a sales cycle of a specific product line. You could also establish your investment cycle on the performance of a particular industry, like automotive. But one of the most critical cycles to base decisions is the overall economic cycle.
An economy will experience strong growth. Interest rates, or the cost to borrow money, will remain low. Production is high, and inflation is just starting to rise.
The economy has officially entered a period of peak growth. As a result, inflation begins to take greater hold, as people with an income start competing over the same limited resources.
Asset prices in the economy become too much to bear, and the economy begins to slow down. Unemployment rises, consumer spending declines, and inflation begins to slow.
This is a low period for the economy. However, events begin to take shape, allowing the economy to expand again, thus restarting the cycle.
It’s vital to note is that profit is always available in every economic cycle. The trick is positioning yourself correctly and knowing when to raid. For example, during a time of economic expansion, stocks tend to rise in value. Thus, a Viking Investor could purchase shares just before a period of expansion hits and sell those shares at a premium. Alternatively, one could wait until economic expansion is at its peak and “short” stocks, assuming that growth has hit its peak.
Economic Cycles are an excellent place to base your investing and raiding strategy. But there are other cycles to be on the lookout for. So here is a small list of different cycles that every Financial Viking should be aware of.
Asset Class Cycles
An asset class is a specific set of investment assets, all tied to one particular industry. All asset classes go through their unique cycles. For example, single-family real estate prices are hitting all-time highs. ( hyperlink) While commercial real estate is poised to lose value as remote work replaces traditional office space.
Most asset classes tend to mirror the general cycle of the economy. Stocks, for example, tend to fall when the economy is in recession. In contrast, housing performs well during a recession, as investors jump out of stocks and invest in housing.
A Viking Financial Warrior needs to pay close attention to changes in asset class prices. Dramatic price shifts in asset classes tend to have a trickle-down effect, where the change in one asset class can directly affect another. So even though you’re not invested in a specific asset class, you most likely will experience a shift in your portfolio in correlation with another asset classes fluctuation.
Presidential & Election Cycles
The nice thing about Presidental Elections is that they are a very predictable affair. Election years are set in stone and never change, regardless of war, economic calamity, or even during a pandemic. And while the pendulum can swing far right or far left, elections happen every four years, guaranteed.
During former President Trump’s 1st campaign, he was unequivocal that his election would result in a lower corporate tax rate. And once President Trump was elected, the corporate tax rate of 39% was lowered down to a flat rate of 21%.
As a direct result, United States entered into one of the longest-running stock market rallies in USA History. Between Trump’s inauguration in 2017 and his last full day in office, the S&P 500, the broadest measure of the US stock market, climbed 67%.
To a Financial Viking, ignoring the politics, and investing in a way that best matches the Commander and Chief, is an excellent cycle on which to base your investment strategy. As long as you can separate your personal beliefs from your investing beliefs. There is always money to be found with any president in charge.
Unique Market Cycles
There wasn’t a news outlet in the world that wasn’t fixated on the infamous Wall Street Bets / GameStop short squeeze drama of early 2021. Wallstreetbets, combined with a new wave of stock trading apps, delivered one of the most crushing blows to a hedge fund in recent memory.
As a result, retail investors worldwide have piled into forms like Reddit and private chat groups on Discord and Telegram. All were attempting to leverage each other and move stocks prices in an all-new way. One could even say, we are entering into a new economic cycle in the stock market. Where retail investors now have more pull than ever before.
To Financial Vahalla
After weeks at sea, your longboat finally lands onshore. Your enemies are caught entirely off guard and were barely able to organize a defense. Your men screamed the name of Odin as the battle unfolded. It was a short yet brutal affair.
As the corpses of the dead pile up, you think back to the early spring. You had successfully timed the cycles. Many in your Viking clan choose to enjoy the early spring. To spend it drinking and smashing drinks, rather than smashing shields. But your instincts proved better. And now, you’ve crushed your enemies, you have seen them driven before you, and you are now hearing the lamentations of their women.
As a Viking, learning to read cycles is the foremost important skill to develop as an investor. For cycles will come, and cycles will go. But the true power of learning how to read them is what will drive you to Financial Valhalla.