Lesson 3 of 3 · 6 min read
Market cycles & bubbles
Markets breathe in cycles of fear and greed.
The four phases
Markets move roughly in phases: accumulation (smart money buys quietly), mark-up (uptrend, optimism), distribution (smart money sells to the crowd) and mark-down (decline, panic).
Bubbles
A bubble forms when prices detach from real value, driven by FOMO and 'this time it's different'. They always burst — only the when is unpredictable.
What it means for you
You don't have to guess the top or bottom. By investing in a spread-out and consistent way (DCA) and keeping a cool head during extremes, you benefit from the cycle without getting caught up in it.
Remember this
- Markets move in four phases: accumulation, mark-up, distribution, mark-down.
- Bubbles form when price detaches from value due to FOMO; they always burst.
- The when of a bubble is unpredictable.
- You don't have to guess a top or bottom: DCA and a cool head are enough.
There is a quiz for this lesson
1 questions that check whether it stuck. They live in the app, because a quiz nobody grades teaches nothing.
Want to practise, not just read?
Stockedin teaches investing in short lessons, with €10,000 in demo money to make your mistakes with. Stocky, the AI coach, explains anything you get stuck on.