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INVESTMENT CYCLE

Investment cycle covers the period, usually spanning several business cycles, from the time of the investment until the point where it stops generating cash flow. It includes Capital expenditures, disposal of fixed assets and changes in long-term investments (i.e. financial assets). Economic cycles range from 28 months to more than 10 years. Stock market cycles have typically anticipated economic cycles by 6 to 12 months on average. The cycles are familiar – the economy expands and contracts as well as the markets rise and fall. Investment decisions are not one-off decisions – public and private actors repeatedly or continuously make choices that shape investments and have impacts on higher developments goals – the cycle here is a way to conceptualize different phases of investment decision making. In this case, behavorial finance is the study of how psychological influences such as emotions like fear and greed as well as conscious and subconscious bias, impact investors’ behaviors and decisions. Many major economies remained in late cycle stages of expansion. Global crosswinds included evidence of solid service activities in many developed economies with monetary tightening and rising of prices weighing on the outlook. The first phase is the early accumulation phase – early accumulators are typically 20 to 39 years old and just starting their careers. Time is on their side, so these investors can generally take on more risks with investments. According to time, investment decisions are the well-planned action, alLocating financial resources to obtain the highest possible return. The decision is made based on investment objectives, risk appetites and the nature of the investor i.e. whether they are an individual or a firm.