PurpleRat50( sorry I don’t know the real name but this is the nickname that is used in Richdad.com) shared an article called “The Seven Stages of a Financial Bubble” is written by Nobel Laureate Hyman Minsky (1919 – 1996). The 7 stages are:

1. Financial Disturbance:
   • Outside Shock
   • Piece of News that Creates Disturbance
   • War, Technology, Monetary Policy
   • Dotcom started 1989 – busted 2000
2. Expansion – Prices Start to Rise
   • Easy Credit
   • Greed
   • Huge Buyer Demand
3. Euphoria
   • Overestimated Future Returns
   • No Concern for Fundamentals
   • Fools Rush In!
   • Pure Speculation
4. Financial Distress – Prices Reach a Peak
   • Market Strength Becomes Fragile
   • Cheap Money Becomes Scarce
   • Insiders Take Profits
   • Greatest Fool Rushes In!
5. Market Reversal – Prices Start to Fall
   • Love of Speculation Ends
   • Insiders Start to Exit
   • Sellers Outnumber Buyers
6. Financial Crisis – Panic Rules the Market
   • Tightening in Bank Lending
   • Panic Feeds Panic
   • Low Prices Tempt Buyers
7. Lender of Last Resort Comes to Rescue
   • Collapse of Confidence in Banking
   • Federal Government Steps In
   • Smart Investors Re-enter

Being an investor, I think it is important to know and sense the signal from the market. I think the list that shared here is quite good to make it as a market checklist to know the market status. Knowing when to enter and exit the market is important and will be an advance for you to make more money.

Source: Richdad.com

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