Economic and market cycles are key concepts that influence investor decision-making and the overall performance of financial markets. Understanding these cycles is essential for successful investing as it provides context for market analysis and helps investors navigate a volatile environment.

Economic cycles are recurring periods of expansion and contraction in economic activity. These cycles are usually divided into four main phases:

Expansion: during this phase, the economy grows, characterized by rising GDP, falling unemployment and rising corporate profits. Consumers are optimistic and willing to spend, which encourages further growth.

Peak: This phase occurs when economic growth reaches its peak. Although the economy is still strong, growth begins to slow and businesses face increasing cost pressures. Inflation may occur and interest rates may start to rise.

Contraction: at this stage, economic activity declines. GDP falls, unemployment rises and businesses face lower demand.…