Phase Analysis Template

Phase analysis template as at:

Bull market phase one: Reviving confidence Phase marker News about the economy and market tends to be negative Has happened Is happening May be happening Not happening The market is anticipating a recovery Private investors are absent from the market The market may ignore bad news Rise thought to be a bear market rally Disbelief rally is a bull market turns to fear of missing out The market is fundamentally undervalued Enquiries into what went wrong Regulation is tightened Bull market phase two: Increasing earnings Phase marker Earnings increases emerging Good news is announced Employments picks up New companies are being floated Significant corrections end higher Fundamental values return to normal Sector rotation Has happened Is happening May be happening Not happening Bull market phase three: Rampant speculation Phase marker Significant fundamental overvaluation Interest rates relatively high Increased price volatility Many new floats and capital raisings Private investors heavily in the market Day traders heavily in the market Increase in use of debt and leverage Much new commercial building activity Increased media coverage New paradigm theories advanced Market driven by few stocks Has happened Is happening May be happening Not happening

Copyright © Colin Nicholson 2010. Please seek my permission to transmit or copy any part of this file other than for your own personal use as permitted by law. This document does not purport to be advice of any kind to any reader. It is intended as a tool for teaching investment through practical examples and using as a basis my investment plan as set out in Building Wealth in the Stock Market. This document has been prepared without knowledge of or regard to the financial plans of any other person. Readers should consult licensed financial, legal and taxation advisers before acting on anything in this document. I am not a licensed adviser.

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Bear market phase one: Abandonment of hopes Phase marker Fundamental valuation still high Interest rates peak The economy is still very strong Public see a buying opportunity Volume falls; buying is done Market may ignore good news Shock news causes shakeout Public panic, maybe causing a crash Floats fail then abandoned Has happened Is happening May be happening Not happening Bear market phase two: Decreasing earnings Phase marker Earnings decreases announced generally Market ignores good news Former market leaders may fail A recession begins Sharp rallies leading to further falls Few new floats Public lose interest Has happened Is happening May be happening Not happening Bear market phase three: Distress selling Phase marker Significant undervaluation Unemployment peaks Many bankruptcies and failures Bad news is discounted Market rarely in the news Low public participation Stock price charts show accumulation Has happened Is happening May be happening Not happening Copyright © Colin Nicholson 2010. Please seek my permission to transmit or copy any part of this file other than for your own personal use as permitted by law. This document does not purport to be advice of any kind to any reader. It is intended as a tool for teaching investment through practical examples and using as a basis my investment plan as set out in Building Wealth in the Stock Market. This document has been prepared without knowledge of or regard to the financial plans of any other person. Readers should consult licensed financial, legal and taxation advisers before acting on anything in this document. I am not a licensed adviser.