Market Playground

By Daniel Beckerman

Gordon Moore

The pace of change in the U.S. economy has accelerated over the past few years. I had an opportunity to sit down with Jim Sarni, who helps to oversee $60 billion at the Los Angeles-based investment firm Payden & Rygel.

We discussed the idea of market cycles whereby one would expect a period of stock market growth (a bull market) followed by a peak or a levelling off. Then, we would expect a downturn (or bear market) at some point, another levelling off and lastly a recovery. ”When I got into this business (a couple of decades ago) it was commonly understood that a market cycle was a minimum of three years,” Jim told me. ”Most people spoke about a market cycle in terms of three to five years.”

He went on: “Now, with the hedge funds, with the alternative players, with the degree of leverage out there, what happens is that things get out of whack and they get to certain valuation levels and you have money that comes flooding in. Valuations get to a certain point and then it triggers these buys or sells orders on computer models that say ‘buy here, sell there.’ So you have this condensed period of revaluations. And now a market cycle happens in a month.” Read More