Knowing about economic and market cycles are
very important in investing. An investor should evaluate the current cycle of
economy and industry. No one can make profit in recession period.We should
invest in cycles of growth and recovery. See the below graph.It shows the
movement in an economy over a long time horizon. Avoid
buying stocks at bearish market. Look into the economic factors. Is the policy
measures of government is positive? How the Central Bank tackle the economic
problems ? What is the growth rate of industry and agriculture? How much rise happened
in the net profit of the company last quarter and year?
If economy is stable,half job is done. An
investor should check the industry trends and identify the market
leader.Physical market share and Competitive advantage of the company determine
returns for an equity investor.Knowledge of financial ratios will help us to
identify the right company to invest.
Stock and Metals prices always move with the
trend.Three types of financial market trends are: Uptrend, Down trend and
sideways trend. Up trend provides good returns for investor
without intense home work. Indian stock market was in an uptrend since 2003 to
2008.After the bull phase,it faced bearish market for eighteen months.After
the crash of sensex on 2008, it revived to the previous level three times. Sideways market face volatile situations. It
create confusion among public. Investing in sideways market cannot make you
wealthy.
An intelligent investor should wait for the
right opportunity in the market cycle. Normally, sideways market is the starting of
up or down trend.We should know the exact price ranges happening in this
period.Range bound cycle is ideal for online traders
who use chart analysis and close monitoring of stock and metal prices.
Identifying the right entry and exit bring profit.When you invest
in gold and other metals, fluctuations are at par with the international
prices.If international price is falling down, exit your investments.
Cycles
of growth and recession is applicable in all assets.
Selling a property
is difficult in a stagnant economic condition. Liquidity is the main problem in
these situations. Often, Common people invest in stocks and metals at
peak prices with a mindset of euphoria or an exaggerated excitement.That is why
many people loose money in the markets. Identification
of market cycle is a hidden secret of value investing.We should invest after the depression at the time of
hope.Gains in revival periods will be
fast.Do not miss this opportunity in stocks,metals or real estate.
Follow the below
rules in your investments.
1. Examine the prevailing economic cycle before
investing.
2. Do not invest in recession period and stagnat
market conditions.
3. Check the cyclical movement in each asset.
4. Avoid buying shares or gold at the peak price to
protect your capital.
5. Invest at bottom, at the start of boom or
recovery
6. Never buy with excitement and euphoria.
7. Do not chase the market.Invest when people are
afraid and valuation is attractive.
Property Investment has been very helpful in my life because of the income it can give to me. Now, many people are targeting this business and has invested because they now its potential. A powerful business that has been able to provide quality income for those who succeeded in this business.
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