Financial reporters and market strategists often argue about whether we are “early-cycle”, “mid-cycle” or “late-cycle”.  However, these perspectives are based on an outdated model of how the U.S. economy behaves.  In a pure “business-cycle” paradigm, the U.S. economy would, today, be in the late innings of an economic expansion that must naturally end rather soon.  However, a more realistic model of today’s economy suggests that this expansion could continue for some time more and that, when it ends, it will be because of some financial, environmental or geopolitical shock rather than the inevitable result of the age and stage of the expansion.  This doesn’t negate the need for diversification.  However, it does suggest that a portfolio should be stress-tested mostly against how it would react to a downturn triggered by non-economic shocks.