The 4 Phases of Market Cycles - Explained

About this Video

• Video Title: The 4 Phases of Market Cycles - Explained
• Channel: Vandell Aljarrah
• Speakers: Vanel Alerra
• Duration: 00:14:57

Introduction

This video explains the four phases of market cycles: accumulation, markup, distribution, and markdown. The speaker, Vanel Alerra, aims to help viewers strategically position themselves for success by understanding these cycles and identifying the current market phase. The information applies to all asset classes, though different asset classes may be in different phases simultaneously.

Key Takeaways

• Market cycles have four phases: Accumulation, Markup (Early, Mid, Late), Distribution, and Markdown. These phases repeat across various asset classes, though not always synchronously.
• Accumulation Phase: The market is at its lowest point. Smart investors (contrarians) begin buying undervalued assets. Retail investors typically lag, influenced by negative mainstream news.
• Markup Phase: Asset prices steadily increase driven by liquidity and investor confidence. This phase has three sub-phases: early, mid, and late. The late phase marks the peak, with late investors entering the market (often FOMO-driven).
• Distribution Phase: Sellers dominate. The bullish outlook wanes. Double or triple tops may be observed. The transition is slow. Investor sentiment shifts from optimistic to bearish. It is highly unpredictable in both duration and volatility.
• Markdown Phase: Significant price declines occur. Market sentiment is overwhelmingly negative. Savvy investors sell off positions. This phase is emotionally challenging for investors.