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What Makes It Difficult For People To Understand The Market Cycles?

Even though most of us know that the stock market follows cycles, there is still a lot of mystery why one is unable to spot it. It is important that one understands this market dynamics on Ethereum Code review to be able to benefit from it.

  • The length of each cycle is different- Every market cycle is of a different length. Sometimes the cycle could last only for a year and other times for decades.
  • Valuations are not constant- Valuation or the price to earnings ratio keeps changing and they differ from one cycle to other. So what may be expensive in this cycle may not be expensive in the next. There is thus no set value when you know that if say the P/E is 50 then the market is overvalued or when P/E is 10 then the market is undervalued
  • There could be one cycle within another- The stock market cycle is defined in a set But it can happen that there is a cycle within a cycle. The individual sectors could have their own cycles and small cycles would affect different stocks etc. These actually get very confusing and for a retail trader, it is impossible to understand these embedded cycles.
  • Interest rates- The interest rates always play a major role to affect these So these have to be tracked as well. Low-interest rates mean that the stocks will perform well. The high-interest rate is not good for the stocks so they fall in value.
  • The stock market and the economic cycle-There is a difference between the market cycle and the economic The economic cycle is basically a measure of the growth rate of the economy. The market cycle is basically a representation of the investor’s willingness to either buy or sell the company stocks. There is a connection between both these cycles but if you thought that they line up perfectly then that does not happen.
  • Getting out of a market- Selling the investment at the market peak is something that most of the investors are not able to do. This is easier said than done because psychology starts playing a major role here.
  • No one likes the bottom- The stock valuations are cheap but investors feel that there are more downside risk and thus very few investors actually make use of the low prices in the market. Investors see that all are making money and this stops them from exiting the market.

 

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About The Blog Author

Teresa Duncan received a degree of Master of Science in Healthcare Management from Marymount University. With over 22 years of healthcare experience (15 in dental), she has unique insight into the world of dentistry. Her specialty is helping dentists and managers increase revenue. By focusing on accounts receivable and insurance management, she helps dentists increase the value of their practice. As a member of the Association of Certified Fraud Examiners, she has a special interest in helping dentists identify and safeguard against employee embezzlement.

Teresa is founder and president of Odyssey Management.

She is a Fellow and Educator for the ICOI’s Association of Dental Implant Auxiliaries. Look for more articles from her regarding practice management, dental implants and oral health care news. She was named 2010’s ADIA Educator of the Year.

Teresa is a member-at-large on the board of the Academy of Dental Management Consultants.

Teresa is a Trustee for the auxiliary education-focused DALE Foundation.

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