There are 5 primary stages of a business cycle:
- Early Expansion
- Late Expansion
- Slowing into Recession
The recession stage is described as the bottom stage of the cycle. It is characterized as the stage ahead of recovery. In this stage, the Fed will expand the money supply in order to stimulate growth. Attractive investment opportunities in this stage include investments such as commodities and stocks.
The recovery stage is characterized as the stage after a recession. The economy is starting to "recover" after the recession; the Federal Government's moves to stimulate the economy begin to have an affect. In this stage, attractive investment opportunities include investments such as cyclical investments and commodities.
3) Early Expansion
The early expansion stage is a continuation of the recovery stage, where the recovery begins to gain momentum. In this stage, attractive investment opportunities include investments in the overall stock market and real estate.
4) Late Expansion
The late expansion stage continues on after the early expansion stage. In this stage the expansion momentum continues and investor confidence is strong. Attractive investment opportunities in the late expansion stage include investments in bonds and interest sensitive investments.
5) Slowing into Recession
This stage occurs after the expansion phase and is the stage where the economy begins to show signs of slowing down and even turning negative. In this stage, attractive investment opportunities include investments in bonds and interest sensitive investments.
Life Cycle Analysis: The Industry Life Cycle
InvestingWe look at how the market signals impending economic cycles and sector performance during each stage.
InsightsHere’s a list of the four basic stages of the economic cycle, and some telltale signs associated with each.
TradingStage analysis offers market participants a powerful tool to identify current market conditions and make rapid adjustments to strategies.
InvestingBuyers need to be able to visualize a house as their future home. Skilled home staging can help them do just that.
Small BusinessProduct life cycle is the period of time during which a product is conceived and developed, brought to market and eventually removed from the market.
Managing WealthInsuring your human capital is something often overlooked. Don't make the mistake of leaving your biggest asset unprotected.
InsightsUnderstanding the business cycle and your own investment style can help you cope with an economic decline.
InvestingExamine economic and sector performance over the business cycle to determine which ratios are most important for each phase of the cycle.
Financial AdvisorRetirement isn't something you can plan for and forget. Your needs will change at different points, which is why you need to plan for the different stages.