Devoted to understanding the basics and fundamentals of investing

During the expansion and growth phase of an economic cycle, interest rates and inflation remain low.  This leads to rising real incomes (nominal incomes minus inflation).  Rising real incomes leads to rising consumption.  Banks relax their lending standards and low interest rates lead to increased borrowing. 

Because consumers represent 2/3rds of the US GDP, when they increase their spending, the increase in demand leads companies to increase production.  This leads to rising capacity utilization.  As plants are used efficiently, productivity continues to rise.  This leads to improved margins and improved profits. 

The increase in production leads companies to begin to hire again and unemployment rates begin to fall as the economy generates more jobs.  Also, capital spending begins to accelerate so that companies can take advantage of the new demand.
This scenario is ideal for stocks and good for bonds.  Cash would be neutral.  It is during this part of the cycle that you would have your maximum exposure to stocks.  You can increase the beta of your portfolio above 1 and you can move to increase the mid-cap stocks. 

This is the point in the cycle where you would have neutral duration in your bond portfolio.  You would want to match the duration of your benchmark.  You would keep just enough cash in your portfolio to meet your liquidity needs.  You would sell things of lesser quality when you wanted to buy something of better quality or faster growth.