The Big Money Is in the First Two Years

Tags: stock market, stocks, stock market useful guide, stocks tips, Earn Money from stock, How to make money in stock market

The Big Money Is in the First Two Years

Almost always, the really big money is made in the first one or two years of a normal new bull market's upward movement. This, then, is the point in time you must recognize as soon as possible and fully capitalize upon while the golden opportunity is there.

The remainder of the up cycle usually consists of back and forth movement in the market averages, followed by a bear market. The year 1965 was one of the few exceptions, but this strong market in the third year of a new cycle was caused by the advent of the Vietnam war. In the first or second year of a bull market, you should have a few intermediate-term declines in the market averages, usually lasting a couple of months, with the market indexes dropping 8% to occasionally 15%. After several sharp downward adjustments of this nature, and once two years of a bull market have passed, heavy volume without further upside progress in the daily market averages could indicate the
beginning of the next bear market.

Since the market is made up of supply and demand, you can decipher a chart of the general market averages almost the same as you read the chart of an individual stock. The better publications display the Dow Jones Industrial Average and S&P 500 in the front of their periodicals. They should show the high and low and close of the market averages day by day for the prior year, together with the daily New York Stock
Exchange volume in millions of shares traded.

Bear markets normally show three legs of price movement down; however, there is no rule that says you cannot have two or even five "down" phases or more. You have to objectively evaluate overall conditions and events in the country and let the general market tell its own story. And you should learn to recognize the story the market is
attempting to tell you.