Analysis of the characteristics of the finance and investment cycle

The aim for this paper is to study if there is a corresponding relationship between the economic cycle and the investors’financial investment options. After the economic cycle is explained and the changes of the capital market and the goods market are analyzed, the following conclusions are made in terms of the economic system, supply-demand relationship and the financial bubbles.The whole economy has a cycle, and so does the investment. Suppose the whole economy is divided into four stages—recession, recovery, overheat and stagflation, and every stage corresponds to a specific investment target whose performance is much better than the market. The four targets are bonds, equities, commodities, and gold. The corresponding ideal investment target is bonds in the period of economic recession; likewise, equities in the period of recovery, commodities in the period of overheat and gold in the period of stagflation. This is the cycle of the financial investment, which corresponds to the economic cycle. Only when the rule of the economic cycle is mastered and certain financial investment options are pursued in certain economic stages can the profits of the investors be maximized.