I have observed that any free markets in the world are behaving cyclically. Careful examination of the time period taken by the market in each legs reveal that they are behaving rythematically.
It seems world Equity markets are moving in 33 year cycle. A new bull market is started in Dow Jones Index in 1950 and it continued for 1983 and the current leg is likely to terminate 2016.
Whenever equity markets are in last phase of a cycle, Bullion markets are behaving in opposite direction of the equity Market. So, Equit Markets are in bull phase if Gold Markets are in bear phase and Gold marekts are in bull phase, when Equity Markets are in bear Phase.
The 1970s Bull Market in the International Equity Markets were lead by Japan. The 1980s and 1990s Bull Market in Equity Markets are lead by south East Asian Countries. The 2000s Bull Market is lead by India and China. So the next bull market is likley to be lead by some other new countries.
The smart Investors should always look for the right Market to invest and the right marktet to withdraw their funds. It will not be profitable for anyone to hold on to their same investments in all period.
Market cycles will help you to time the market at appropriate time. So do study the Market cylces and take investment decisions based on the study for profitable Investments.
Wednesday, December 9, 2009
Monday, December 7, 2009
In Financial Markets, herd mentality is in work. Investors always go by the herd.
Last year, they chased real estate and property prices shoot up world over and investors bought properties as though there is no tomorrow.
So, this effectively set up a stage for impending financial Bubble and that happened. Property prices fell all over the world. Many caught in the melee. Banks went bankrupt. Companies went bankrupt. Individual went bankrupt.
But still, herd mentality is in work. Now, the people are chasing Gold assets and it has effectively set the stage for the next financial Bubble, that is ‘Gold Bubble’.
Financial Bubbles are created when all of the investors who are interested in a particular asset want to get hold of it. Once the buying potential recedes, then a huge selling potential is created. Once prices start coming down, panic selling by all the investors push down the prices beyond its intrinsic value. This is how financial bubbles are burst.
The present price rise in gold reminds me of bubble is being built in it. It is likely to burst in another six months. The same story will happen again. Banks will go bankrupt. Companies will go bankrupt. And individuals will go bankrupt.
Let us see, if this happens shortly.