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Can You Profitably Time an Investment Cycle?
Profitable investing comes from picking the right asset classes to invest in and handling your investments in such a way as to avoid losing money, instead of gaining profits. The value of an investment comes from its expected future returns. This expected future ROI is what intrinsic value is based on. And, as the economy rises and falls, so do the value of investments. What investors are willing to pay for an investment rises and falls with market sentiment. Thus the economy and the perceptions of other investors help drive an investment cycle. The best time to invest is at the start of the investment cycle and the best time, obviously, to take profits is before the end. But, how can you profitably time and investment cycle?
Can You Profitably Time an Investment Cycle: The 4 Phases
An investment cycle has four parts:
The accumulation part is in the late stages of a substantial market correction or crash. Many investors are throwing in the towel. But, this is when the smart money enters or re-enters the stock, bond, and real estate markets. Can you profitably time an investment cycle by purchasing at this time? The key to success at this point is to be sure that the market has bottomed out. At this time competent intrinsic value calculations will indicate what investments to buy.