{"id":3278,"date":"2019-08-12T08:00:07","date_gmt":"2019-08-12T06:00:07","guid":{"rendered":"http:\/\/contattoblogs.timslatter.co.za\/?p=3278"},"modified":"2019-08-12T08:00:07","modified_gmt":"2019-08-12T06:00:07","slug":"dont-let-market-cycles-catch-you-out","status":"publish","type":"post","link":"https:\/\/contattolive.co.za\/north\/dont-let-market-cycles-catch-you-out\/","title":{"rendered":"Don\u2019t let market cycles catch you out"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-3281\" src=\"https:\/\/contattolive.co.za\/north\/wp-content\/uploads\/2019\/07\/050504_1-5c05847746e0fb0001e829ff.gif\" alt=\"\" width=\"500\" height=\"305\" \/><\/p>\n<p>Source: <a href=\"https:\/\/www.investopedia.com\/trading\/market-cycles-key-maximum-returns\/\">Investopedia<\/a><\/p>\n<p>If there were a set of commandments for investing, the first commandment may well be this: know your seasons.<\/p>\n<p>Just like a surfer or fisherman know the tides of their favourite spots, prudent investors know the market cycles.<\/p>\n<p>\u201cThe problem is that most investors and traders either fail to recognize that markets are cyclical or forget to expect the end of the current market phase,\u201d says <em>Investopedia<\/em>. Many investors will come up with a strategy, and it may be a very good one, then with enthusiasm rush out into the marketplace and expect to impose their vision on the market or, in their excitement, misinterpret the signs.<\/p>\n<p>This is like rushing out into a thunderstorm without an umbrella in a T-shirt, because you feel like sunshine. We all need to obey what the climate and environment is doing. A good investor is very much like a farmer, knowing that there is a time to sow and to reap, to keep store for lean months and times to feast as well.<\/p>\n<p><strong>The four seasons<\/strong><\/p>\n<p>Just like any other rhythm or cadence, markets tend to begin low, climb, reach a certain high point and then fall until a certain low point. Then the cycle begins again.<\/p>\n<p>The four phases are generally referred to as accumulation, mark-up, distribution and mark-down in the financial industry. Allocation is the beginning of a new cycle, when prices are low and savvy buyers are buying. As things in the market settle and rally, the prices rise and this is mark-up. At the investment\u2019s peak, when it has become the most valued and expensive it\u2019s going to get, that\u2019s called distribution because the savvy sell now. Those who don\u2019t sell have to deal with mark-down, the fall from grace, when the investment loses its value as the cycle descends to begin anew and ride the next mark-up wave.<\/p>\n<p>&nbsp;<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-3280\" src=\"https:\/\/contattolive.co.za\/north\/wp-content\/uploads\/2019\/07\/050504_2-5c05847546e0fb0001eef829.gif\" alt=\"\" width=\"493\" height=\"240\" \/><\/p>\n<p>Source: <a href=\"https:\/\/www.investopedia.com\/trading\/market-cycles-key-maximum-returns\/\" target=\"_blank\" rel=\"noopener noreferrer\">Investopedia<\/a><\/p>\n<p>If they sound a bit like shopping around Christmas in fancy department stores, you\u2019re right \u2013 stocks are a product and, just like any other product, have a marked-up price and a discount price. It\u2019s wisdom to buy it \u2018on sale\u2019, wait until it\u2019s in demand and then sell it for a higher price than you bought it for before it devalues as the next new thing comes in.<\/p>\n<p><strong>Know your animals, too<\/strong><\/p>\n<p>Then there\u2019s also the global sentiment of the market: bullish or bearish, hawkish or dovish and for what reason. These are directly linked to the four phases. Currently, America is in a fragile, yet still-running, bull market \u2013 the longest bull market in history. Many a betting man would\u2019ve lost his shirt by predicting, reasonably, that it would have ended a long time ago. But that\u2019s how markets are \u2013 and we must be cognisant of them. It would be just as foolish to not take these into account as it would be to build your entire investment strategy around them.<\/p>\n<p><strong>A man for all seasons<\/strong><\/p>\n<p>There is a reason for the phrase \u2018unpredictable as weather\u2019, which should also be \u2018unpredictable as markets\u2019 \u2013 it can be famously hard to predict the exact right moment when an investment will reach its peak value, will start to decline or appreciate. The cycle is a law unto itself at times, just like climate patterns and weather \u2013 there are rules, but no one knows when there\u2019ll be an exception.<\/p>\n<p>If anything, the cyclical nature of all markets shows the need for good advice. Lean and fat times come and go, but your future security should not depend on it but rather get richer and mature with the seasons, just like you.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>If there were a set of commandments for investing, the first commandment may well be this: know your seasons.<\/p>\n<p>Just like a surfer or fisherman know the tides of their favourite spots, prudent investors know the market cycles.<\/p>\n","protected":false},"author":1,"featured_media":3287,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12,27],"tags":[],"class_list":["post-3278","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-market"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Don\u2019t let market cycles catch you out - Contatto North<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/contattolive.co.za\/north\/dont-let-market-cycles-catch-you-out\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Don\u2019t let market cycles catch you out - Contatto North\" \/>\n<meta property=\"og:description\" content=\"If there were a set of commandments for investing, the first commandment may well be this: know your seasons. 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