top of page
Business Cycle 5.jpg

Asset Performance and the Business Cycle

Traditional investment theory suggests there are four phases in the business cycle: expansion, peak, contraction and trough.


During the contraction phase, the economy is often considered to be in a recession.

Marble Surface

You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets.

                                                         - Peter Lynch





Over time, some of the most dramatic declines in portfolio values were experienced during economic recessions. Our Financial Defensive Condition (FIN-DEFCON®) strategy attempts to identify economic trends that have preceded past U.S. economic recessions and recoveries, and then use this information to influence asset allocation decisions.


Asset allocation is a term used to describe how investments are distributed among different asset classes, such as fixed income or equities. However, asset allocation cannot guarantee a profit or protect against loss. 


The goal of the FIN-DEFCON® strategy is to influence Dynamic Asset Allocation changes and improve long-term portfolio performance relative to a Strategic Asset Allocation (Buy and Hold) strategy and the “Optimal Risk Portfolio in the Single-Index Model” formula widely recognized in academic research: 

Optimal Risk Portfolio.jpg

The FIN-DEFCON® alert system employs terminology similar to the United States’ Armed Force's Defensive Readiness Condition (DEFCON) system.  FIN-DEFCON® is a proprietary strategy developed by Gerald Steffes, CPA, CFP®, AIF®, with Steffes Financial, Ltd, in Overland Park, Kansas. See important disclosures under the Disclosures Tab.

Marble Surface

When the market goes up and up, everyone looks like an investing genius. It's only when things go sour that you see who actually has a good long-term strategy.

                                               - Warren Buffett

bottom of page