Understanding the Economic Cycle in Financial Markets

The financial markets move through a recurring sequence of phases known as the economic cycle. Each cycle includes several distinct stages—typically expansion, peak, contraction, and recovery. Upon completing one full cycle, a new one inevitably begins.

At every phase, investor sentiment shifts, reflecting prevailing market dynamics: optimism in expansion, euphoria at the peak, caution during contraction, and renewed hope in recovery.

🧭 From a strategic standpoint, identifying where we currently stand in this cycle can offer valuable insight for positioning and risk management.

What’s your assessment of today’s market environment?