Although you can't time the market, you can improve your returns by knowing where we are in the business cycle. You can then adjust your asset allocation to take advantage of the phases…. OR YOU CAN INVEST WITH A ROBO ADVISOR and not have to know all of the below.
The business cycle has the following four stages:
The economy grows a healthy 2 to 3%. Stocks enter what is defined as “a bull market”
🏖🏜The economy grows more than 3 percent. Inflation sends prices up. There are asset bubbles. The stock market is in a state of "irrational exuberance." ⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀
Economic growth slows but isn't negative. Stocks enter what is called a besr market.
🌋The economy contracts. That signals a recession. Economic experts predict it will continue for years. Historically, expansion phases last five years or so.
How to Protect Yourself in Each Business Cycle Phase
Sit tight. If you haven’t sold stocks by the time the economy contracts,🌐 it’s probably too late. You could move some assets into bonds or cash,💰💴 but keep some in stocks. You want to catch the rebound when it occurs. A recession or bear market usually lasts six to 18 months.
Start adding BITCOIN, stocks and commodities such as gold, oil, 🏗and real🏚 estate. They should be cheap during a recession.
In the early stages of an expansion, small-cap stocks grow the fastest. That’s because small companies🏨 are nimble enough to take advantage of a market turnaround. You can gain extra income with high-yield bonds. Add stocks and bonds from foreign developed and emerging markets. Later on in the expansion, add mid-cap and large-cap stocks.🏢 Larger companies do better in the late stages of a recovery. ⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀
📈📊Sell stocks, commodities, and junk bonds. Increase the proportion of cash and fixed income. The safest🔒 are U.S. Treasury bonds, savings bonds, and municipal bonds.