Credit Cycle is important to monitor when investing in the stock market.

Credit Cycle is important to monitor when investing in the stock market.
Credit Cycle is important to monitor when investing in the stock market.

How The Economic Machine Works by Ray Dalio

When turkey goes bankrupt, that collateral now goes to zero in Germany. That collateral supports 15x its year ago value.
If a German bank doesn’t have the cash to improve reserve ratio, they may need to take capital from another bank who has lent against it.
Since all banks are on 15:1 capital or more, 5% depletion of assets can force them to raise cash.
this can scare partners to not send money or withdraw which further exacerbates the problem.
This is called Contagion.

Bail out in 2008
chinese bailout in 2015
next bailout will be offspring of Turkey

market flat to down.
when it falls in crash, will I need cash to sell?
dollar cost average in very slowly
Will my stocks be up at bottom?

within the old system, US cash is safest

VTI vs VOO
BRK.B
IBM
TSLA

in credit crunch – for crypto, there will not be any bailouts.
BTC and ETH is on its own cycle not yet dependent on the USD credit cycle.

Credit Cycle is important to monitor when investing in the stock market.