Super Glossary

Market Cycles

Business / Taxes / Market Cycles: Market cycles are the recurrent patterns of expansion and contraction that characterize the securities and real estate markets. While the pace of these recurrent cycles of gain and loss isn?€™t predictable, certain economic conditions affect the markets in fairly reliable ways. For instance, stock and real estate usually gain value when the economy is healthy and growing, whereas bonds often do well during periods of rising interest rates. And during times of economic uncertainty, investors often prefer to put their money into short-term cash equivalent investments, such as US Treasury bills. The cyclical pattern in one type of asset sometimes works in opposition to what?€™s occurring at the same time in another asset class or subclass. For example, when the stock market is gaining value, the bond market may be flat or falling, or vice versa. Similarly, sometimes large-company stocks increase in value faster than small caps, but sometimes the opposite is true. But while the ups and downs of the markets are inevitable, it?€™s also true that it?€™s virtually impossible to pinpoint the peak of a rising market or the bottom of a falling market except in hindsight.
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