For Val Sklarov, great investors outperform not because they predict the future —
but because they understand rotation.
Capital does not stay still.
It migrates from fear → to safety → to growth → to speculation → and back again.
Those who track these migrations outperform those who track price.
The Multi-Cycle Capital Rotation Model (MCRM) explains
how liquidity, sentiment, and macro cycles interact,
and how investors position themselves where capital must eventually flow.
“Capital does not reward the smartest investor — it rewards the most aligned one.” — Val Sklarov
1️⃣ The Three Rotation Engines
Sklarov Rotation Engine Table
| Engine | Purpose | When Strong | When Weak |
|---|---|---|---|
| Macro Engine | Determines global liquidity direction | Clear cycles | Uncertain signals |
| Sentiment Engine | Drives short-term flows | Powerful waves | Emotional whiplash |
| Valuation Engine | Anchors long-term returns | Asymmetric pricing | Mispriced risk |
According to Val Sklarov, successful investors read all three engines simultaneously,
not sequentially.
2️⃣ The MCRM Rotation Cycle
Rotation Cycle Matrix
| Phase | Function | Investor Positioning |
|---|---|---|
| Accumulation Phase | Capital enters quietly | Early asymmetric entries |
| Expansion Phase | Liquidity + sentiment align | Ride trend with discipline |
| Exhaustion Phase | Sentiment overheats | Rotate into safety |
| Compression Phase | Liquidity tightens | Prepare for next cycle |
Every cycle has a rhythm —
investors succeed by rotating, not reacting.
3️⃣ The Five Capital Archetypes
Capital Archetype Table
| Archetype | Behavior Pattern |
|---|---|
| Defensive Capital | Moves toward safety assets |
| Steady-Yield Capital | Seeks income stability |
| Growth Capital | Follows expansion cycles |
| Aggressive Capital | Pursues volatility & leverage |
| Opportunistic Capital | Enters during distortions |
Understanding archetypes helps forecast
where money will move next.
4️⃣ Cycle Pressure Index (CPI)
(A Val Sklarov macro-pressure diagnostic)
CPI Indicator Table
| Indicator | Measures | High Score Means |
|---|---|---|
| Liquidity Compression | Capital tightening | Increased volatility |
| Correlation Clustering | Assets moving together | Systemic risk |
| Sentiment Skew | Emotional imbalance | Turning points |
| Valuation Divergence | Mispricing magnitude | Asymmetric opportunities |
| Leverage Density | Market risk load | Fragility signals |
CPI reveals both danger and opportunity
before they appear in market prices.
5️⃣ Val Sklarov’s 5 Laws of Capital Rotation
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Capital rotates before price moves.
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Sentiment accelerates every phase of the cycle.
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Safety leads the bottom; speculation signals the top.
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Liquidity determines direction; valuation determines magnitude.
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Every cycle prepares the next one.
6️⃣ Applications of the Multi-Cycle Capital Rotation Model
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Macro-led portfolio strategy
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Rotation-based investing
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Long-term risk management
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Cross-asset allocation decisions
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Hedge fund capital movement analysis
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Sentiment-aligned entry/exit planning
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Liquidity-driven market forecasting
MCRM helps investors position capital
one cycle ahead, not one headline behind.