How to Survive a Long Term Bearish Forex Market?

Most financial markets experts are talking about how the policies of the Central Bank seem to be ineffective in generating a sustained path of economic growth. Investors are also revolting against the policies that Central Banks are trying to implement as they feel that these policies can have a detrimental impact. However, there is a larger impact and trend that is emerging across global financial markets that one needs to be aware of.

This Article talks about the oncoming scenario in the forex market and how investors should face the situation.

Market condition

The equity markets witnessed steep declines, but also oversold dramatically. If this is talked about in terms of rate of change, the markets have been as oversold this year as it was during the period of 2011 and 2012. At that time the European and the US debt markets saw corrections. However, the overselling of the markets was not as much as it was during 2008 with the collapse of the Lehman enterprise. Even if experts do not think that the situation is as bad as the second half of 2008, the market structure in general has become more fragile this year which has culminated over a long time.

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Timing market investments

Even though market experts will talk about the efficient market dynamics or the Wall Street propaganda, there are times when investors need to get into the forex market while in other cases they need to get their money somewhere else. The question of how to time the market might be a difficult one to answer and plan. When Central Banks are trying out experimental policies the timing of market investments then the situation become even more difficult, at such times, investors would do well to remember the concept of bull and bear markets and look at the long term trends.

Secular trends

Research done on the market conditions and prediction of the general direction showcase the general direction the markets are taking. Usually there are extended periods when the markets surge and then stall. These are known as secular bull and bear markets. The market valuations like price and earnings ratios either increase in their values or are mitigated during these periods. While bull markets start with such values being below average, the bear markets do not end when the price and earnings ratios are above average. One needs to understand that these concepts are long term. Hence, one cannot simply use the earnings of a year of a corporate scenario to predict the start of a trend, but the scene needs to be checked over a long term.

As per the secular bull and bear market analyses, it is clear that the equity market in the US remains in the bear phase that started at the beginning of the new millennium. The price and earnings ratios remain at the peaks from where bull markets usually start. Hence, this indicates that this might not be the time when one should heavily invest in the markets. It is predicted that the bull market will continue with share prices falling for a decade or more. For more related information on Forex Markets, Check this Link.


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