Stock cycle

In addition to the economic and interest rate cycle, the stock cycle is a component of the undulating development of an economy. Typically, the stock cycle moves first, followed by the economic cycle and, with a certain time delay, the interest rate cycle. In a bull market, for example, demand for credit and wages will soar, leading to rising interest rates. Thus, equities will become less attractive compared to bonds, leading to decreasing stock market prices.

While the stock cycle is on the upswing, psychologically, investors tend to move from doubt to hope, to optimism, to faith in the bullish market, and finally euphoria when the peak is reached. In times of downturn, investors will go through the following psychological phases: confirmation of one's own positioning, anxiety, denial of trends, panic, and anger when the bottom is reached.