Many sectors are particularly vulnerable to these up and down swings.
Building and construction companies, automobile companies and steel producers are hanging on the economy as puppets on a string. Big profits alternately with setbacks or even huge losses during recession.
And shares of the companies and sectors most affected by the up and down swing of the economy. When profits in the good times, more often than not, these stocks skyrocket disproportionately. But when profits decline, investors release these stocks as if they bear plague.
OK. It can be said that this is not a problem. You simply buy cyclical stocks when prices down, and sell when prices activities. In low and sell high!
But, unfortunately, the economy is not quite that reliable. Especially not in the stock market. If it is that easy to make money with stocks, lottery companies will withdraw from all business not time.
There are all sorts of factors that can be found in your path, such as war, financial and currency crisis, as we have in Russia and Asia in 90. Or oil prices give us a hard again.
So you can not say with absolute precission when your stocks have reached bottom in the same way as you will not be able to say exactly when the stocks are at the very peak before the market corrects again.
A excellent example cyclical stocks General Motors and Ford. Stocks of these 2 companies play so poorly in the past, that they have been downgraded to junk status, the rating company Standard and Poors.
The headlines on marketwatch.com reading:
GM, Ford debt reduction to take losses stocks.
S and S traits automakers " credit rating on spam status.
Shares General Motors slid 5.9%, while Ford shares fell 4.5% after Standard and Poor & 39; s cut its long - and short-term corporate credit ratings of GM and Ford at such a low level, that the word & quot; spam status " obsolete faster than 2 stocks fell that day.
But what can be expected if you look at the stock charts of the two corporations.
To view card, click on the following link: http: / / www.stockbreakthroughs.com / News / cyclic-against-stocks.htm
Holding growth in these stocks makes no sense and is a waste of time and money!
Often on reallity with cyclical stocks is that investors receive in their trade too late, and too late to quit. The media are also to blame for that. When word recovery is out, it is already in full swing. It has not only begun. Buying then meaningless to the investor that speculates on the purchase and sale of low high.
And when headlines scream recession " & quot;, at the bottom of the valley has already been achieved long ago. Sale now makes little sense, because the prices in the red again.
Also growth stocks with no guarantees for a quick and easy buck!
But they have one huge advantage:
In long term, prices are only points in one direction .. . UP!
The starting point for long-term investors, of course, not as important as with cyclical stocks. Recession more rarely, and, with few exceptions, are also not as violent.
A shares of Johnson & Johnson (J and J), and General Electric (GE) is an excellent example for a strong and solid growth stock:
Again, simply click http:/ / www.stockbreakthroughs.com / News / cyclical growth-versus-stocks.htm to view charts.
The 3 dips in J and J in the table, and GE was only because of the general downturn in the world between 2000 and 2003 after a big " " popped Internet bubble. But while most cyclical stocks are still at the bottom, J and J, and GE has long been on their way again.
These kind you can always buy shares without any second thoughts.
In my experience, cyclical stocks will lose you more money , and nerves cost you more than you can ever fill with a few lucky " cyclic & quot; trades.
Yours successful in the trade, Schmidt
Ricky jolene lakeesha
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