Stock Market Cycles
Many investors that are new on the stock market get panicked when they hear that the market has dropped significantly. However, experienced stock investors are well aware that such falls are absolutely normal being part of the business cycle.
The overall trend of the market is as follows: prices rise (the market expands) over a period of time, whereas during this period there are small retreats. However, a point is reached at which the market becomes a little bit volatile.
After this point is reached, the prices start to fall, also known as sell-off, triggered by some event such as war, economic news and etc. A correction of this sell-off is expected and hoped but it may not come for days and even weeks.
This trend is not always observed, but this is the usual course of the economic cycle.
After the sell-off occurs, different corrections are applied to save the situations.
In March 2000, the so called Internet/Tech bubble that has started to inflate in the late 1990s burst leaving the NASDAQ with a one-half of its over-inflated value loss. It may not be able to recover in the decades to come.
Even though stocks have proven their long-term profitability, investors that use them should be aware that there are times of no or stagnant growth that may leave them with relative small returns. Holding stocks over the long-term requires you to be good at the trading game, otherwise, you should be ready to say goodbye to your money.
Zecco offers free stock trades, no account minimum, real time quotes, trading community, and is also insured and protected against loss by SIPC. Opening a Zecco account
| Rate this article : Low | High |
- Variable Annuity Contracts Explained
- Hedge Funds 101: Introduction to Hedge Fund Investing
- Investment Planning 101 – Getting Started on Investing
- Asset Allocation – Choosing the Best Allocation Strategy
- What Investors Need to Know about Financial Analysts
- What Are Financial Analysts?
- Brokerage Account Opening: Things to Do and Remember
- Understanding Mutual Companies
- Auditing Essentials
- Introduction to Microcap Stocks
- Understanding Trade Execution
- SEC Order-Handling Rules
- Understanding Margin Calls
- Stock Market Day Trading
- How to Read Stock Tables
- Understanding After-Hours Trading
- Why Do Companies Go Public
- Price to Sales Ratio (PSR) Explanation
- Price to Earnings (P/E) Ratio Basics
- Price to Earnings Growth Ratio (PEG) Explanation
- Understanding Inventory Turnover Ratio
- Understanding Return on Equity and Return on Assets
- Price/Book Value Advantages and Disadvantages
- Importance of Current Assets and Current Liabilities
- Technical Analysis Basics
- Fundamental Analysis Technique Basics
- Technology Stock Characteristics
- Foreign Stock Characteristics
- Small Cap Stocks Characteristics
- Large Cap Stock Characteristics
- Stock Price Volatility
- Introduction to Stocks
- Stock Market Investing Basics
- Consumer Price Index Basics
- Option Basics and Types
- IPO Basics and Strategies
- Inverted Yield Curve Implications
- CPI Basics
- Earnings Season Basics
- Stock Market Movements
- Asset Allocation Basics
- Foreign Stocks Basics
- Rising Interest Rates and their Effects
- Value Investing Basics
- Advance Decline Ratio Basics
- Stock Price Influences
- Dividend Yield Explanation
- Book Value Explanation
- Trailing Stop Order Basics
- Stop Loss Order Fundamentals
- Newspaper and Online Stock Quotes
- Setting Stock Prices
- Stock Order Types
- Company Market Capitalization
- NYSE and Market Specialists
- Market Makers Role and Responsibilities
- Stock Trading Basics and Order Types
- Bid and Ask Prices
- Stock Share Types
- Stock Market Indexes and Fair Value Indications
- Stock Split Basics
- Stock Market Sectors Classification
- Federal Reserve Board (Fed) Functions and Importance
- Stock Market Cycles
- Stock Dividends Basics
- Stock Basics
- Stock Buyback Reasons
- Types of Brokerage Accounts
- Stock Broker Categories
- Certified Financial Planner Designations
- Financial Advisor Job Description
- Discount Stock Brokers vs Full Service Brokers
- US Treasury I Bonds Basics
- Convertible Bonds Basics
- Zero Coupon Bonds Basics
- Bond Definition and Concepts
- Stock Investing Basics
- Investment Goals Planning
- Classes of Assets - Asset Class Definition
- Mutual Funds vs Individual Stocks
- Stock Investing vs. Saving