The Market Cycles Decision System

The Market Cycles decision system does not select individual securities — it decides how much risk to own, in which asset classes, and in which geographies. It translates the regime analysis from the framework into specific portfolio actions: when to increase equity exposure, when to reduce duration in bonds, when to hold more gold, when to go defensive. These decisions are made at the portfolio level, not the stock level, and they are the highest-leverage decisions most investors never make systematically.

Why This Matters

Dalio's framework is explicit: the portfolio is the product of asset allocation decisions across four possible economic regimes, sized to balance risk contribution (not capital) across all regimes. Marks's contribution is the cycle positioning overlay: adjusting the overall risk level of the portfolio based on where in the cycle we are, independent of the regime assessment. Grantham's valuation overlay adds a third dimension: reducing exposure when starting valuations imply structurally lower returns over the coming decade. The system that follows integrates all three frameworks into a decision protocol — a step-by-step process for translating macro analysis into portfolio action.