Understanding the Basics of Stock Market Cycles

“The key to making money is not being right all the time”

Understanding stock market cycles is essential for any investor. Whether you’re a short-term trader or a long-term investor, it’s important to know how stocks move up and down over time.

By recognizing cyclical patterns in the market, you can get better at executing your investing strategy.

The up-and-down nature of markets is so hard to deal with that we often forget that markets have cycles. We get emotional and make decisions that we later regret.

What are market cycles?

Stock market cycles describe the fluctuation in stock prices over time, alternating between periods of growth and decline. Understanding cycles will not make you good at predicting markets.

It will simply help you to make fewer mistakes and avoid losses. As the famous investor Howard Marks says:

“The key to making money is not being right all the time, but minimizing losses when you’re wrong and allowing profits to run when you’re right.”

Marks wrote the best book on cycles, called Mastering The Market Cycle. In the book, he writes about all the different types of cycles that matter to investors, from the…