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The recurring pattern of expansion (bull market), peak, contraction (bear market), and trough in financial markets and the broader economy.
Market cycles are driven by the interplay of economic conditions, corporate earnings, interest rates, and investor sentiment. A full cycle from peak to peak has historically averaged about 5-7 years, though individual cycles vary widely. The expansion phase is characterized by rising corporate profits, increasing employment, and bullish investor sentiment. The contraction phase features declining profits, rising unemployment, and pessimism. Understanding where you are in the cycle can inform asset allocation decisions, though timing cycles precisely is extremely difficult even for professional investors.