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Sometimes, cycles in the markets may be erratic and therefore difficult and almost impossible to forecast or foresee. A peak or valley in the market, most of the times is never predictable or obvious. It becomes clear sometimes after it has already happened. However positively or negatively the cycles affect the markets, it is essential to understand that they affect the market performance. The bonds, as well as the stocks, can suffer or benefit from these cycles. The case applies to real estates and finances. It is critical to note that the different or various investment types there are may move in totally different directions in case of changes in the markets. For example, research and history indicate that if the value of the stocks tends to increase, the prices of bonds may typically go down. On the other hand, if the prices of the bonds go up, then the value of the stock goes down.
The market ups and downs are usually influenced and affected by both the economic and political conditions. For example in a well-growing economy, real estates, as well as the stocks, do better when compared to those economies that are not growing. If the taxes are reduced, it means that the stock values are likely to rise. Furthermore, improved or high employment rates in a nation may have the same effects. An increase in the corporate profits, as well as high political stability, may also have positive impacts on stock values. On the other hand, the bonds market may tend to do well in periods or durations marked by political uncertainties. International conflicts, as well as moderate levels of inflation, may also cause a boom in these markets. Highly volatile stock markets accompanied by a tight supply of money may also have a positive effect on the bond markets.
First, there may be a correction in the market. This constitutes of a sudden drop of the major market indexes. The drop is usually 10%. After this, the stock prices in a company tend to realistically reflect and show its earnings potential as well as its growth rate. Secondly, a crash constitutes of a situation where the market may keep dropping; could be a 20% drop or even more. Usually, the drop may be accompanied by widespread disposal or selling. Finally, bubble involves a situation in which investors insist on driving the stock prices to levels that are unsustainable.