Economic Bungee Jumping.

Economic Bungee Jumping.  I questioned what this really meant, and then I read "Catching the bottom of the cycle can turbocharge your portfolio or business plan, while missing the peak can lay waste to both." and then it hit me, stocks.  Business cycles are hard to predict.  Population and productivity have a huge part in making the economy rise and/or fall.  "  Business cycles are an unavoidable and largely unpredictable feature of market economies."  (p.2)  Predictions of the cycle are mainly made on gut feeling, not very statistical at all.  (quite the opposite of what I thought)

There are also imbalances in the economy.  Such as Bear and Bull markets.  A bull market is when prices in a certain area are rising, while bear markets are more violent than a bull market.  Bull expectations are expectations to boost investment and stock prices.

The definition of a recession is "two or more consecutive quarters of declining GDP"  A press release is required for a recession to begin.  " They declare a recession when they conclude there  has been a significent decline in economic activity across the economy, lasting more than a few months"  The word we use "recession" is a just a term that replaced the word "depression" in the business world.

When the economy attempts to recuperate and fails to come out of a recession, it becomes a depression.  Banks become cripple because of their dependency on the loans go bad because of companies investment booms fail.  On top of that, other countries economies can affect us if they are to crash. In the late 1980's and early 1990's Finland's GDP dropped 10% because of the Soviet Union collapsing.  (most of their money comes from vodka anyways)

In conclusion to my blog, there is no producer with out the consumer(s). They both keep the cycle of the economy going.  Once there is an imbalance, recession will be called.  The failure of the natural recuperative process comes from a broken financial system blocks the flow of credit.







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