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cycle
This is a mind map about "Cycle". "Cycle" is a book that deeply analyzes the laws of market cycles and has high reference value and guiding significance for investors.
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cycle
- bacteria
This is a mind map about bacteria, and its main contents include: overview, morphology, types, structure, reproduction, distribution, application, and expansion. The summary is comprehensive and meticulous, suitable as review materials.
- Plant asexual reproduction
This is a mind map about plant asexual reproduction, and its main contents include: concept, spore reproduction, vegetative reproduction, tissue culture, and buds. The summary is comprehensive and meticulous, suitable as review materials.
- Reproductive development of animals
This is a mind map about the reproductive development of animals, and its main contents include: insects, frogs, birds, sexual reproduction, and asexual reproduction. The summary is comprehensive and meticulous, suitable as review materials.
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- Outline
"cycle"
Understand the three major laws of cycles
The first law of cycles: If you don't follow a straight line, you must follow a curve - the future is bright, but the road is tortuous
The second law of cycles: They will not be the same, only similar - history will not repeat the details of the past, but it will repeat similar processes.
The third law of cycles: go less to the middle and more to the extremes - the market cycle fluctuates around the basic trend line or average line.
Cycles always exist; investment success itself also has cycles
Three categories and nine types of analysis cycles
The first type of cycle: fundamental cycle
economic cycle
Influencing factor 1: Total population participating in production
Influencing factor 2: Production efficiency
Government regulation counter-cyclical
Influencing factor 1: Monetary policy
Influencing factor 2: Fiscal policy
corporate profit cycle
Influencing factor 1: Operating leverage - the greater the proportion of fixed costs such as factory buildings in total operating costs, the higher the operating leverage.
Influencing factor 2: Financial leverage - the greater the proportion of debt financing in the total cost of the enterprise, the higher the financial leverage.
The second type of cycle: psychological cycle
Psychological pendulum: Investors’ psychology and emotions when facing securities are like a pendulum, swinging sharply back and forth between the two extremes of fear and greed.
Risk attitude cycle: Investors’ attitudes towards risk will periodically rise and fall, from excessive risk aversion to excessive risk tolerance.
The third type of cycle: market cycle
Credit cycle: When credit expands, no matter how bad a company is, it can borrow money; when credit tightens, no matter how good a company is, it is difficult to borrow money.
The subprime mortgage crisis is actually a crisis caused by the credit cycle going to extremes.
Distressed debt investment cycle
real estate cycle
Feature 1: It takes several years from product conception to delivery to customers. The long real estate cycle has a particularly large initial payment, so it has a great impact on the profitability of real estate investment.
Characteristic 2: Developers only saw themselves for the trees and missed the forest. They did not expect that many peers would have the same idea. As a result, there was a "swarm of bees" phenomenon, and the market was either overheated or too cold.
Feature 3: Investors blindly believe that housing prices will always rise
stock market cycle
Feature 1: The stock market cycle is both affected by and affects other cycles
Characteristic 2: Investors are not rational economic persons. Their psychology and emotions will fluctuate greatly, so the buying and selling prices of assets will deviate significantly from the value. This is where the investment opportunities lie, and also where the investment risks lie.
Feature 3: Both the bull market and the bear market have three stages.
bull market
Stage 1: A few people see improvement in fundamentals and the stock market rises slightly
Stage 2: Some people see improvement in fundamentals and the stock market rises
Stage 3: Everyone sees improving fundamentals and stock market rises
Big Bear Market: The opposite of Big Bull Market
Three-step operation of response cycle
Knowledgeable
Use some key indicators to gauge where the market is now in the cycle
Courageous
Be fearful when others are greedy, be greedy when others are fearful
Be prepared: Be prepared to make mistakes in three aspects
Mistake 1: Your mistake—it’s human to make mistakes
Mistake 2: Unexpected events outside the market - storms, floods, earthquakes, tsunamis, trade wars...
Mistake 3: The market itself is wrong - the market stays wrong longer than you can keep your position from being liquidated.