Stock Market Cycles Explained: Master the Four Phases Every Investor Must Know

Stock Market Cycles Explained: Master the Four Phases Every Investor Must Know
Understanding stock market cycles is essential for making rational investment decisions. The market moves through four distinct phases: boom, correction, recession, and recovery. During booms, rising prices create overconfidence, but strong past performance does not eliminate risk. Corrections of ten percent or more are normal and often driven by interest rates or global events. Bear markets involve sustained declines exceeding twenty percent, triggering fear-based selling that actually creates long-term opportunities. Recovery phases require patience and structured scaling into positions rather than waiting for certainty. The critical principle across all cycles is recognizing that price differs from value. Lower prices do not mean lower quality.