30 July 2025
In the vast, noisy world of market predictions, few frameworks have persisted as stubbornly - and as eerily accurately - as the 18-year investment cycle. It’s a rhythm of boom and bust that has shaped global economies for more than a century, linking land values, credit expansion, and investor psychology into a pattern that often culminates in crisis.
The pressing question: if history continues to rhyme, are we heading toward another peak - and potential shock - by 2026–2027?
To understand why this cycle has persisted for over a century, we need to delve deeper than simple price movements. It’s about the interplay between human behaviour, financial structures, and time.
Economists such as Fred Harrison and Phil Anderson have argued that the 18-year rhythm (Anderson specifies it more precisely at around 18.6 years, often tying it to broader U.S. cycles) is hardwired into how land and credit markets function, and, crucially, into how investors respond to them.
When property prices rise, lenders tend to expand their credit. As memories of past crises fade, new participants enter the market with confidence, fuelling speculative surges. These layers of optimism build until the market can no longer sustain itself, leading to a painful reset.
It’s important to stress that this cycle represents an average rather than a precise calendar rule. Real-world durations often fluctuate by a few years, and recent events - particularly Covid-related stimulus and unprecedented policy interventions - may have recalibrated the rhythm, potentially shifting the next peak beyond 2026–27.
However, this cycle reflects more than just economics; it’s the psychology of crowds, the danger of forgetting past lessons, and the irresistible pull of “easy money”.
To see this cycle in action, history provides clear examples. Across the past century, we can trace a pattern of exuberance and collapse, each separated by roughly 18 years. These aren’t coincidences; they are evidence of a recurring structure within global markets:
• 1973–74: The oil crisis and stagflation shook a world economy that had been lulled into complacency by years of growth.
• 1990–92: Overheated property markets and overextended credit systems led to a painful recession.
• 2008: A housing bubble and reckless lending practices triggered the Global Financial Crisis, shaking the global financial system to its core.
Each of these events followed years of rising valuations, loosened credit conditions, and widespread belief that “this time is different”.
Fast forward to 2025, and the same questions are resurfacing. Are we in a genuinely new paradigm of resilient growth, or are we simply replaying the final act of another 18-year boom?
Following the 2008 crash, unprecedented monetary easing led to a prolonged expansion across equities, real estate, private equity, and, more recently, digital assets. Even central bank tightening in 2022–2023 couldn’t derail this momentum.
But look closer, and late-cycle signals are hard to miss. Property valuations remain historically high in key markets, private equity funds are holding record levels of dry powder, and speculative energy is alive in sectors like AI, blockchain, and high-growth tech. It feels eerily familiar, the glow of a market nearing its peak.
Cycles don’t end without warning - they leave breadcrumbs for those willing to pay attention. If we really are nearing the crest of this 18-year wave, these are the red flags investors should be monitoring:
• Property overreach: Rapid surges in land and housing values often precede corrections.
• Credit tightening: Defaults, stricter lending standards, and disappearing liquidity are key warning signs.
• Policy shocks: Overcorrections by central banks or geopolitical crises can accelerate a downturn from a slow cooling to a hard landing.
Each of these indicators alone might seem manageable. Together, they often signal the beginning of the end of a mature cycle.
If we are heading toward another turning point, the goal isn’t to panic, but to prepare. Successful late-cycle investing means building resilience while retaining the ability to capitalise on opportunities when they emerge.
Here’s what that looks like in practice:
• Rebalance toward quality: Focus on companies with strong balance sheets and consistent cash flows that can weather volatility.
• Reassess liquidity: Treat cash as a strategic allocation, giving you the optionality to move quickly when markets dislocate.
• Diversify into alternatives: Vehicles like Long-Term Asset Funds (LTAFs) provide exposure to private equity, infrastructure, and other illiquid assets that can smooth public market swings.
• Hedge selectively: Incorporate defensive positions like short-duration bonds or gold to protect against sudden shocks.
If history holds true, 2026–2027 could mark more than just another moment in time - it could be the next turning point in a century-old cycle of exuberance and correction. However, it’s equally important to remember that the 18-year pattern is best viewed as a heuristic, rather than a precise calendar rule. Whether this translates into a soft landing or a seismic reset will depend on how policymakers, markets, and investors respond.
For those willing to prepare rather than react, this late stage of the cycle doesn’t have to be a threat - it can be an opportunity.
Note: This article is for informational purposes only and does not constitute financial advice.
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