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The Rotation From Equities and Bonds to Real Assets Has Begun

The 17.6-Year Cycle: Why Investors Cannot Ignore It

Cycles have long been an underappreciated yet recurring feature of markets. History shows that the rise and fall of asset classes, industries, and even entire economies follow identifiable rhythms. One of the most powerful and empirically grounded patterns is the 17.6-year cycle, a recurring sequence that has governed capital markets for centuries and continues to shape our present and future.

Origins of the 17.6-Year Cycle

Researchers and market historians have identified a 17.6-year economic and financial cycle, sometimes referred to as a “hard asset cycle,” which reflects the long-term ebb and flow of capital between financial assets (stocks, bonds, paper claims) and tangible assets (commodities, real estate, infrastructure). This cycle has been studied by analysts ranging from economic historians to modern portfolio theorists.

Notably, legendary investors such as Jim Rogers and Warren Buffett have both referred to the approximate 18-year rotation between financial assets and hard assets. Rogers, in particular, has emphasized that long cycles of commodity underinvestment are inevitably followed by explosive bull markets when supply constraints meet surging demand. Buffett, though not a “cycle theorist” per se, has acknowledged the rhythm of asset class leadership, remarking that periods of prolonged equity outperformance give way to hard asset dominance, and vice versa.

The 17.6-year cycle provides a framework to understand these shifts not as random events, but as part of a repeating historical pattern.

Historical Context

• Post-War Boom (1948–1966): Equity markets enjoyed a prolonged expansion, supported by industrial growth, demographic trends, and stable monetary policy.
• Inflationary Era (1966–1982): Hard assets, particularly commodities and gold, vastly outperformed as inflation surged and equities stagnated.
• Financial Asset Supercycle (1982–2000): Deregulation, globalization, and falling interest rates fueled one of the greatest equity and bond bull markets in history.
• Hard Asset Recovery (2000–2016): Commodities, energy, and emerging markets dominated as capital rotated back into real assets, culminating in the 2008 commodity boom.
• Financial Asset Dominance (2016–2024): A period of low rates, massive liquidity injections, and technology leadership extended financial asset outperformance beyond historical norms.

Now, as we enter the mid-2020s, evidence suggests we are transitioning once again toward hard asset leadership.

The Current Backdrop

Several structural forces point to the resurgence of the 17.6-year cycle:

1. Persistent Inflation Pressures
   Despite central banks’ efforts to contain price growth, supply chain restructuring, labor market tightness, and geopolitical shocks have introduced persistent inflationary forces. This undermines the purchasing power of paper assets while enhancing the value of tangible stores of wealth.
2. Stagflationary Regime Risk
   The global economy faces the risk of a stagflationary environment — weak real growth coupled with high inflation. This is a toxic mix for equities and bonds, but historically supportive for commodities, infrastructure, and alternative assets.
3. Political Pressure on Central Banks
   The Federal Reserve and the European Central Bank increasingly operate under political scrutiny. As fiscal deficits mount and social spending rises, the pressure to maintain low nominal rates — even in the face of inflation — will erode the real value of financial assets.
4. Undercapitalization of Hard Assets
   Years of underinvestment in energy infrastructure, mining, agriculture, and timberland have left global supply constrained. As demand rises, these sectors will be positioned for outsized returns.
5. Geopolitical Fragmentation
   The breakdown of globalization and the return of economic nationalism create further tailwinds for tangible assets tied to national security and resource independence.

Investment Implications

If history is any guide, the next decade-plus will mark a secular rotation from financial assets to hard assets. For investors, this means:

• Reducing reliance on traditional equity and bond allocations.
• Increasing exposure to commodities, energy infrastructure, agriculture, timberland, and physical assets.
• Positioning portfolios to withstand inflationary and stagflationary conditions.
• Allocating capital to opportunistic distressed debt and private credit markets, which benefit when financial stress is high.

At Serapis Global Inc., our multi-strategy global macro approach is expressly designed to adapt to such cycles. We view the 17.6-year cycle not as a theoretical curiosity but as a practical guide for portfolio construction and risk management. By combining liquid macro strategies with opportunistic allocations to hard assets and alternative verticals, we seek to position our shareholders on the right side of history’s most enduring patterns.

Conclusion

The lesson of the 17.6-year cycle is clear: leadership rotates, and capital must adapt. Just as past investors who ignored inflation in the 1970s paid a steep price, today’s overreliance on financial assets risks substantial underperformance in the coming cycle.

Serapis Global is committed to preparing for — and profiting from — the return of the hard asset era.

Please reach out for Partnership or Investment Opportunites: contact@serapisglobal.com