STOCKS AND THE BUSINESS CYCLE

Stocks, particularly common stocks, are very sensitive to changes in the business cycle. Economic conditions affect the performance of businesses, and business conditions, in turn, have their impact on the wider economy. Stocks are affected by both. In this tutorial, we will discuss the nature of the business cycle and how it affects stocks. Investors who understand the movements of the business world are in a better position to pick profitable stocks than are those who do not.

What Is the Business Cycle? How Do Stocks React to the Business Cycle? How Do Investors Buy Stocks During the Business Cycle? Stocks Are Intricately Linked to the Business Cycle

We will begin by examining the hypothetical roller coaster known as the business cycle.