Why markets think in cycles — and how emotions shape each phase

Markets don't move linearly. They operate in cycles shaped by emotions, expectations, and collective psychology. Bull markets aren't solely driven by strong fundamentals—and bear markets aren't solely driven by weak ones.

The psychology of the crowd determines the pace, depth, and duration of each market phase.

🔍 Why Psychology Dominates Markets

• Investors act emotionally, not rationally.
• Mood reinforces trends
• Narratives spread faster than data.
• Herd behavior creates exaggerations.
• Fear and greed are more powerful than logic.

👉 Market cycles are psychological cycles.

🟢 Bull market psychology

From cautious hope to euphoric overestimation of oneself

A bull market goes through typical emotional phases:

1. Disbelief ("This won't last long")

After a crash, many people don't believe in recovery.

Features:

• low participation
• high cash ratios
• skepticism

2. Acceptance ("Maybe it will continue after all")

The recovery is becoming visible.

Features:

• first tributaries
• cautious optimism
• rising valuations

3. Euphoria ("It can only get b

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