The business cycle refers to the recurring and fluctuating pattern of economic expansion and contraction experienced by an economy over time, typically characterised by four phases: expansion (rising GDP, employment, and consumer spending), peak (maximum economic output), contraction or recession (declining economic activity), and trough (lowest point before recovery begins). Business cycles are driven by factors including monetary policy, fiscal stimulus, credit conditions, consumer confidence, and external shocks. For investors on Ventura Securities, positioning equity portfolios in line with the prevailing phase of the business cycle — overweighting cyclicals during expansions and defensives during contractions — is a foundational principle of top-down macroeconomic investing.
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