Business Cycles: History, Theory and Investment Reality

Tvede, a Danish investor and writer, surveys the intellectual history of business cycle theory and connects it to investment practice. The historical section covers the economists who built the field, from John Law and Cantillon through Juglar, Jevons, Mitchell, Schumpeter, Kondratieff, Keynes, Hayek and later work on real business cycles.

His synthesis identifies several cycles operating at different frequencies simultaneously: an inventory cycle of roughly three to five years, a capital expenditure cycle of seven to eleven years, a property and construction cycle of around eighteen to twenty years, and the long Kondratieff wave whose existence is disputed. He argues that the interaction of cycles operating at different lengths explains why no single cycle is clearly visible in the data.

The investment section maps asset classes onto cycle phases: which sectors lead a recovery, when bonds outperform equities, how commodities behave late in an expansion, and which indicators lead and lag. He gives specific attention to inventories, to the yield curve, to money supply and to construction starts as leading indicators.

The book is a survey rather than an original contribution, and it is more useful as an organised introduction to the literature than as a source of investment method. The Kondratieff material is the weakest part, since the long wave's existence is not established and Tvede treats it as more solid than the evidence supports. The specific indicator relationships are drawn from a period whose monetary regime has changed.