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Markets
Market Cycles Explained
Markets move in cycles of expansion and contraction. Understanding where we are in the cycle helps you make better decisions about when to be aggressive and when to be defensive.
The Four Phases
1. Accumulation
Smart money buys after a downturn. Sentiment is pessimistic. Valuations are low. This is when value investors find the best opportunities.
Smart money buys after a downturn. Sentiment is pessimistic. Valuations are low. This is when value investors find the best opportunities.
2. Mark-Up
Prices rise as more investors notice the recovery. Economic data improves. Media coverage turns positive. The trend is your friend.
Prices rise as more investors notice the recovery. Economic data improves. Media coverage turns positive. The trend is your friend.
3. Distribution
Smart money sells to late buyers. Euphoria and FOMO dominate. Valuations are stretched. "This time is different" narratives appear.
Smart money sells to late buyers. Euphoria and FOMO dominate. Valuations are stretched. "This time is different" narratives appear.
4. Mark-Down
Prices fall. Panic selling. Media turns catastrophic. But this is where the next cycle's opportunities are born.
Prices fall. Panic selling. Media turns catastrophic. But this is where the next cycle's opportunities are born.
Value investors thrive in phases 1 and 4, when fear is highest and prices are lowest. The DipBuster Score helps identify stocks that are undervalued relative to their intrinsic worth regardless of cycle phase.