The Analyst’s Course · Macro Regimes
The Regime Playbook — Your Five-Minute Weekly Check
The four quadrants
Map CAPE percentile (cheap/middle vs expensive) × curve state (steep/normal vs flat/inverted): Q1 Expensive+Normal — the default modern regime: hold target equity, tilt on contributions, favor quality/short-duration. Q2 Expensive+Inverted — maximum caution: complete the tilt, recycle into quality and shorter duration, tighten position sizing, expect both-legs risk (lesson 6). Q3 Cheap+Normal — the accumulation zone: deploy tilt savings, extend duration in equities, loosen entry discipline. Q4 Cheap+Inverted — historically the rarest and best buying zone (2009): maximum deployment with the acceptance that the inversion may be late-cycle. Pre-commit your behaviors per quadrant — in writing, before the extreme arrives.
The five-minute routine
Weekly, same day: (1) read CAPE level + percentile drift; (2) read 2s10s and 3M-10Y and the inversion duration counter; (3) check the whole-curve shape for which mechanism is driving (lesson 4); (4) compare against your written quadrant rules; (5) act only if a pre-committed threshold was crossed. Five minutes, no forecasts, no macro punditry — the dashboard does the remembering, you do the discipline.
What the playbook is not
It is not a return maximizer — in trending bull markets it will lag (the tuition, paid quarterly). It is a drawdown manager: its value shows up in the 2022s and 2008s, concentrated and predictable. Investors who track both panels' history (the panel keeps the percentile and duration counters running) consistently report the same finding: the routine's biggest effect is preventing the portfolio-changing decision made in the middle of the portfolio-changing event.
CAPE pct (level) × curve state (mechanism) → pre-committed action
Quadrant map — Write the four behaviors down now. The extreme arrives on its own schedule.
The pre-commitment dividend
The best-documented failure mode in behavioral finance is the mid-crisis decision: 2020 March (selling the bottom), 2022 (capitulating at the rate peak). Investors with written quadrant rules outperformed not because the rules were clever but because the decision had already been made when it was cheap to think. The playbook's real product is the removal of the worst decision from your future.
What you'll practise
Q2 (Expensive + Inverted) calls for…
3 graded checkpoints · certification exam at the end of the track
Sources
Shiller, Irrational Exuberance (3rd ed.); Estrella & Mishkin (1996); multpl.com; US Treasury
Learn content is for education only — not individualized financial advice, a recommendation, or a solicitation to buy or sell any security. Options involve substantial risk. Examples are simplified and historical patterns never guarantee future results.