Economies follow cycles, like an ocean with ebbs and flows. These ebbs and flows are the consequence of the central banks' mission to keep prices stable by taming inflation by increasing interest rates and triggering growth by lowering interest rates.
Each cycle has four phases. There is a recession, a trough, an expansion, and a peak. The thing is, you never really know in which part of the cycle you are at present. Currently, we are either in a recession or have hit the trough, but in any case, we are in a downturn. Now is the time to learn what investing in companies is all about.
When you invest in a company, you are buying pieces of it. One share represents one piece. The more pieces you own the greater your ownership of the company is.
The chart below shows clearly that stock markets follow these ebbs and flows, it also shows that stock markets recover over time. The current stock market is in ebb or downturn phase (recession or trough). It would be the time to get invested or at least learn how to invest because stocks are “on sale” right now.
Source: https://www.finanzen.net/index/smi/seit1988 (1988-2023)
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Written by Therese Faessler, Founder of invested.ch and SFTA Head of Financial Literacy