Over the past 100 years the stock market has evolved greatly, but there has always been one main thing that has never changed in the market…
If you know the things that never change in the market you will be much better at predicting future price cycles.
The History Of the Market
Around 100 years ago in the stock market everything was done based on tickets, you would exchange tickets in order to purchase stock.
Prices were also dealt in quarters, meaning that instead of purchasing a stock that cost $30.23, you would pay $30.25.
Today, things are done in decimal format, and the internet has given us the ability of high frequency computer trading. Also, we no longer have stock certificates because everything is done digitally.
As you can see, a lot has changed in the market over the past 100 years but the one thing that has not changed, is human behavior.
If you watch human behavior and listen to what is going on around you, and see how it’s applying to the stock market, you will be able to predict future trends much better.
How Does Human Behavior Apply To The Stock Market?
- Seasonality is the first thing that affects the stock market. In the summer time you do not see a lot of people investing, this is the time that they are traveling, going on vacation, and spending time with their families. It has remained the same over the past 100 years that in the summer, the market volume dies down. In the winter time, people tend to invest more due to bonuses or extra income.
- Baby Booms also affect the stock market. When a baby boom happens, people have less money to invest due to having to spend money on their children. This can last anywhere from 5-15 years after the baby boom. So when this happens everything in the market tends to slowly die down as well because people are using their extra income to support the new member of their family.
Normally the market evolves much more rapidly than we as humans do, but if you pay attention to these cycles and you look at them very closely, you will be able to predict trends of what will happen to the market. You will be able to predict if the market will slow down or if it will accelerate which will give you a huge advantage.
You must understand that this is a long term play, it is not a computer algorithm because the change is very slow. But paying attention to these changes will help you gain long term success in the market.