Most investors believe that markets behave cyclically, like an ocean tide that ebbs and flows. Bull markets give way to bear markets; booms turn into busts; low interest rates yield to high interest rates. And it’s true, markets are cyclical…but not like ocean tides.

Financial markets are cyclical…like an Ouroboros – the mythological snake that devours its own tail. Economic trends are forever in the process of devouring parts of the financial markets. Recessions consume stocks; recoveries consume bonds.