| The Repetitive Stock Market Cycle |
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| Written by Shaun Rosenberg |
| Friday, 10 September 2010 18:20 |
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There are new investors coming into the stock market all the time and most seem to be unaware of how it actually works and this causes them to panic and become greedy. Here is some stock market for beginners information which can help you keep your calm and help you see the bigger picture.
There are new investors coming into the stock market all the time and most seem to be unaware of how it actually works and this causes them to panic and become greedy. Here is some stock market for beginners information which can help you keep your calm and help you see the bigger picture. The stock market has been moving in a consistent reoccurring pattern. And it is not just the stock market other markets where there is solid demand and limited supply see the same kind of movements, real estate comes to mind here. So, what is this cycle? It is called the bull market/bear market cycle. It all begins when prices are low compared to the companies that they are actually backing. Investors who see legitimate long term value in it jump into the market and start buying stocks. This buying pressure pushes stocks upward and other people start buying stocks to get into it. As stocks go higher and higher more people think that there is a gold rush going on and start buying stocks. The added demand pushes stocks higher. As stocks continue to head up suddenly people start to think that the world is getting better and that the stock market will never crash ever again. However in the end the market cannot sustain unrealistic prices forever. If the stock is trading for 2 or 3 times its real value it is going to have to pull back eventually. In fact one of the major causes of the great depression was the roaring 20s and how high the prices got to. Eventually smart investors start to sell their stock because they know it is too expensive. This pushes the price of stocks down and leads to a lot of panic selling. The added selling pressure brought on by the panic leads to lower prices and so on. Eventually the "gurus" stop trying to call the bottom of the stock market and everyone thinks that the world is ending. One of the free stock tips that people tend to give is to start investing your money during this time because it is usually when the bottom hits and we start going up again. While the stock market is still pretty low new investors will come in and start investing into it. This creates another bull market and set forth the next cycle. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. For more information on the stock market visit Shaun's site on stocks This article, The Repetitive Stock Market Cycle has free reprint rights. |