The Market Cycles of Your Lifetime (Ch. 1)
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The Market Cycles of Your Lifetime (Ch. 1)
An investor will experience 4 market cycles to grow individual wealth.
…more recently, we can look to September 11, 2001 and the fall of the World Trade Centers in New York, NY. This catastrophe set off a domino effect in the global economy that saw capital (stock) markets fall, retirement accounts erased, millions of job losses, thousands of deaths, billions of dollars in destruction, and a redirection of government funds and priorities. A recovery ensued only for the next bust to occur seven years later…
Enter. The Market Cycle.
A Market Cycle is defined by a period of economic boom followed by an economic bust. Historically, this boom and bust cycle occurs approximately every 10 years. Ironically, a Market Cycle starts with a bust to signal the end of a full boom/bust cycle. Then, as if climbing uphill at 45 degrees, this is the period of economic growth.
This uphill trajectory is not exactly linear. When zooming in, there are peaks and valleys of economic growth and contraction, and these curves trend up or down depending on the location in the cycle.
In 1918, the end of World War I began a steady growth in the US economy and the start of a Market Cycle boom. Then, one of the most significant busts occurred in 1929, the start of the Great Depression. This depression lasted three years until the economy began to grow. Approximately 10 years after the stock market crash of ‘29, World War II started which ended a complete Market Cycle, and a new one began with very slow economic growth.
These booms and bust cycles are not limited to the United States. Russia, Mexico, Greece, Japan, and many other countries have credit systems and stock markets that are susceptible to growth and contraction.
More recently, we can look to September 11, 2001 and the fall of the World Trade Centers in New York, NY. This catastrophe set off a domino effect in the global economy that saw capital (stock) markets fall, retirement accounts erased, millions of job losses, thousands of deaths, billions of dollars in destruction, and a redirection of government funds and priorities. A recovery ensued only for the next bust to occur seven years later with the 2008 Financial Crisis. While massive deaths were prevented, a similar trend occurred with capital markets falling, retirement accounts erased, millions of job losses, and a redirection of government funds and priorities. And from 2008 until February 2020, a longer boom occurred only for the COVID pandemic to bust the global market economy and complete the end of the Market Cycle.
In today's economic environment, countries are fighting inflation, supply chain challenges, political division, among a host of other social and economic issues. The sentiment amongst the Twitterverse, government officials, and business leaders is that we are heading into a long road to economic recovery and eventual, growth. The good news, while difficult to see, is this economic recovery will look like all other economic recoveries. Like the hare-and-turtle race, they both finish, one just faster than the other.
Read Chapter 2. The Economic Cycles within the Market Cycle.
The Market Cycles of Your Lifetime
Chapter 1 — Enter the Market Cycle
Chapter 2 — The Economic Cycles within the Market Cycle
Chapter 3 — Managing Money Through the Cycles