The stock market has seasons just as the year does. Awareness of this phenomenon can assist in better preparing one’s investments in reflecting this reality. Lack of awareness can lead to panic when things do not go as expected. A closer examination of the stock market’s four seasons follows.
This chill time is the bear market. High volatility marks this period, as do company bankruptcies. Financial panic may be in the news. Contrary to the popular belief of those who fear that each bear market is the end of the financial world, this is a good time to buy stocks. The media works to manufacture fear, but the studies and reports that they show are cherry-picked to attract attention.
This transition time is between the bull and bear market. The bitter chill of economic recession, general negativity, and unemployment begin to lift. It is important to keep in mind that no announcement will herald the beginning of the thaw. The media is often a season behind in its reporting. Economic reporting is not done in the present tense. This time offers some of the prime opportunities for stock investment. One first starts to see recovery in earnings, then in the share price.
After a few years of the spring of recovery comes summer; this is the bull market in its prime. The media again recognizes stocks as quality investments. Blue chips perform excellently in this period. Industries that are new and emerging spring up throughout these periods, such as biotech did in the bull that was most recent. Investing in this period involves going where the ride takes one.
This season is marked by the end of the bull market. It is easy to spot, but timing it is impossible. During a bull market’s end, one witness many IPOs and acquisitions and mergers. Company founders try to cash in before the time grows too late, while companies increasingly merge as they strive to continue summer’s rapid growth. Just as in the year’s autumn, it is time to pick apples and crops, this is the time to be quite picky in one’s investments. This is the trickiest season to invest in.
About Raging Bull Trading
Raging Bull Trading is a trading program that teaches both new and experienced traders about the art of trading and the stock market. Originally launched in 2010 by professional traders Jeff Bishop and Jason Bond, Raging Bull Trading offers a comprehensive course on mastering stock trading from industry experts. The program includes lessons on stock picks, stock ideas, how to get started in trading, and an overall stock market education.