Actually there are many cycle theories, Economic/Business Cycle, Market Cycle, Presidential Cycle, holiday cycle and so on. To me, stock market and the economy moves in tandem and it is the most relevant to investors today.
According to Investopedia, Market Cycle is defined as "Trends or patterns that may exist in a given market environment, allowing some securities or asset classes to outperform other". Everything in nature has a pattern, even man-made financial systems have a pattern. I would recommend the movie "Pi" for anyone interested to learn more about patterns in man-made systems and how they display similarity to nature. A very weird but interesting movie.
Getting back to the topic, the phenomenon of market cycles exist and we as investors should take advantage of it as much as we can. Its actually quite hard to pin-point exactly what stage we are in the market cycle because of the lack of specificity. There is no specific beginning or ending to a phase. However, as with most market professionals, I agree they exist and our Investment Strategy should include short to medium term swings within the cycle.
The big question is: Where are we in the market cycle???
Well that depends on your own interpretations, you might disagree with the following. In my opinion we are in the Late Bull phase in the stock market cycle, which also corresponds to the middle of economic recovery. I am expecting a peak in Gold and commodities by 2015 but this bubble is not sustainable. It will eventually burst sometime in 2015 when we are in the middle of a recession.
Inflation and central bank interventions through monetary policy easing has actually distorted the market cycle and skewed my previous predictions. In fact, I initially anticipated a recession starting 2nd Quarter of 2013 and have made preparations for it already (by taking profits and having ready cash). Now it looks like it will be 6-12months before we get into a bear market.
Forget what investement bank guru's are telling you, they have a reputation of telling you things a little too late. It is better for you to decide for yourself. Where do you think we are in the market cycle?
According to Investopedia, Market Cycle is defined as "Trends or patterns that may exist in a given market environment, allowing some securities or asset classes to outperform other". Everything in nature has a pattern, even man-made financial systems have a pattern. I would recommend the movie "Pi" for anyone interested to learn more about patterns in man-made systems and how they display similarity to nature. A very weird but interesting movie.
Getting back to the topic, the phenomenon of market cycles exist and we as investors should take advantage of it as much as we can. Its actually quite hard to pin-point exactly what stage we are in the market cycle because of the lack of specificity. There is no specific beginning or ending to a phase. However, as with most market professionals, I agree they exist and our Investment Strategy should include short to medium term swings within the cycle.
The big question is: Where are we in the market cycle???
Well that depends on your own interpretations, you might disagree with the following. In my opinion we are in the Late Bull phase in the stock market cycle, which also corresponds to the middle of economic recovery. I am expecting a peak in Gold and commodities by 2015 but this bubble is not sustainable. It will eventually burst sometime in 2015 when we are in the middle of a recession.
Inflation and central bank interventions through monetary policy easing has actually distorted the market cycle and skewed my previous predictions. In fact, I initially anticipated a recession starting 2nd Quarter of 2013 and have made preparations for it already (by taking profits and having ready cash). Now it looks like it will be 6-12months before we get into a bear market.
Forget what investement bank guru's are telling you, they have a reputation of telling you things a little too late. It is better for you to decide for yourself. Where do you think we are in the market cycle?
