The Merrill Clock describes a complete economic cycle of about 3 to 4 years. This cycle is divided into four stages: spring, summer, autumn, and winter, each corresponding to different market environments and asset performances.

The core idea is simple—allocate different assets in different seasons. Just like farming, what seeds to plant in spring and what water to give in summer are all different.

Because the entire cycle spans a relatively long period, the change of seasons usually takes about a year, but this timeframe is not absolute. Sometimes it can change in half a year, and other times it may take two years to see the results. This is very important because investing is not as predictable as farming.

Many institutional and individual investors use the Merrill Clock theory to guide their asset allocation decisions. Based on the current stage of the economic cycle, they dynamically adjust the holdings of stocks, bonds, commodities, cash, and other assets. This has become a fairly mature allocation methodology.