For sure, wage growth is belatedly rising across the US, Europe and Japan, but remains well below that in prior cycles. Inflation has also risen toward, but is yet to move above, central banks' key targets in any major jurisdiction. Last week's surprisingly tame US inflation data once again questions just how quickly rising wages will show up in higher inflation in a world of rising new investment and technological change. Further, trends in business surveys have recovered from their early-year weakness to be consistent with well-above-average global growth this year and next.

As Northern Trust, one of the world's largest custodians, recently highlighted, the US cycle has "plenty of room to grow" based on previous expansions, with growth rising 41 per cent over the past decade, compared with around 75 per cent in both the 1980s and 2000s expansions. The US Fed is still more than 0.5 per cent below its estimate of a "normal" interest rate, and new chair Jerome Powell at the August central bank talkfest in Jackson Hole noted that "there does not seem to be an elevated risk of overheating". In Europe, interest rates look on course to rise from negative levels to just "zero" by the end of 2019.

Caution needed

And yet maturing cycles still embody tension. Growth remains strong, though not accelerating. And after a decade of tremendous gain in risk assets, nothing is arguably "cheap". Balancing the fear of an unexpected correction, UBS recently showed that since 1928, average returns in the final year of an equity bull market have been 22 per cent. This cycle also has the added challenge of persistent (and unforecastable) trade wars and other geopolitical risks that could weigh heavily on risk appetite.

So is there value staying engaged in late cycle markets?

While closer to its end than its beginning, the evidence suggests that the economic cycle still has some way to run. Adopting highly defensive portfolios too prematurely can come with significant cost to returns. Similarly, attempting to time markets by stepping away from the discipline of a diversified portfolio (with in-built defensive assets for protection) has invariably delivered inferior returns for investors.

But later-cycle investing still demands caution. It involves understanding that returns are likely to be more moderate and more volatile than earlier in the cycle. It also involves keeping a weather eye on the macroeconomic signals that the growth cycle is truly weakening.

Caution in the later cycle also means not being overweight risk yet remaining engaged with it. Allocations to risk assets should be neutral (or normal), not aggressively overweight and focused on regions and sectors where growth is strong or valuations more compelling.

Protecting capital through maturing cycles is also key. Investors should ensure ample cash and liquidity and be seeking out high-quality uncorrelated "alternative" assets (such as hedge funds) that can protect capital when forecasts are wrong.

When the economic cycle turns, the market's ability to look through many of the geopolitical risks that now confront us will undoubtedly be challenged. This should also be the point that investors gather comfort from a diversified portfolio and can put liquidity to work accumulating high-quality assets at more attractive prices.

Scott Haslem is chief investment officer of Crestone Wealth Management.