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Stock Market Store
I Trade, Therefore I Am
Some things benefit from high interest rates, be prepared. Understand cycles in the market and make better wealth building decisions. Understand trend, and now you know everything.
Below the diagram are definitions of the cycles.
Stock Market Cycles are the patterns of expansion and contraction in the economy represented by the flow from recession to recovery and back. Cycles, as the word implies, are constant repetitive motion, conditions that repeat themselves and go on and on, round and round.
copyright© Dr.CharlesSchaap www.stockmarketstore.com2006
Stocks can be classified according to how they react to business cycles. Cyclical stocks are stocks of companies whose profits move up and down according to the business cycle. Cyclical companies tend to make products or provide services that are in lower demand during downturns in the economy and higher demand during upswings. The automobile, steel, and housing industries are all examples of cyclical businesses that rely on discretionary spending.
The stock prices of cyclical and non-cyclical stocks relate to how the business cycle changes. Cyclical stocks move more dramatically, both up and down.
Defensive stocks are the opposite of cyclical stocks. When money is tight, what can you do without or put off, what do you really need?The products of defensive sector stocks are requirements, for example, food and utilities.
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