This is where most traders go wrong: they average down during every small bounce, end up stuck, exit with large losses, and miss the major rally that follows.
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Wealthcreator
Capital Cycles Where we are at current stat ??
Let understand with example
Capital Cycle With example of Toy Shop
Step 1: Good Times, Many New Shops
- One toy shop makes a lot of money.
- Everyone thinks toy shops are great, lets open more.
- Many new toy shops open.
- Owners and investors feel happy and hopeful, optimistic.
Step 2: Too Many Shops, Money Goes Down
- Lots of toy shops but same number of kids buying toys.
- Each shop sells fewer toys.
- Profits fall, share prices do badly, underperform.
Step 3: Shops Close, People Become Sad
- Some toy shops lose so much money they stop buying new toys.
- They may shut down.
- Fewer shops stay open.
- Owners and investors feel sad and scared, pessimistic.
Step 4: Fewer Shops, Good Times Start Again
- Remaining shops have less competition.
- They sell more toys again.
- Profits go up, share prices do well, outperform.
- People think toy shops are good business again.
- Story goes back to Step 1.
Step 1: Good Times, Many New Shops
- One toy shop makes a lot of money.
- Everyone thinks toy shops are great, lets open more.
- Many new toy shops open.
- Owners and investors feel happy and hopeful, optimistic.
Step 2: Too Many Shops, Money Goes Down
- Lots of toy shops but same number of kids buying toys.
- Each shop sells fewer toys.
- Profits fall, share prices do badly, underperform.
Step 3: Shops Close, People Become Sad
- Some toy shops lose so much money they stop buying new toys.
- They may shut down.
- Fewer shops stay open.
- Owners and investors feel sad and scared, pessimistic.
Step 4: Fewer Shops, Good Times Start Again
- Remaining shops have less competition.
- They sell more toys again.
- Profits go up, share prices do well, outperform.
- People think toy shops are good business again.
- Story goes back to Step 1.
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One more example based on Airlines
Early Phase Indian Airlines (1992–2005)
List of Early Entrants
East West Airlines (1992)
Jet Airways (1993)
Air Sahara (1993)
ModiLuft (1993)
Air Deccan (1996 / rebranded as Deccan Aviation)
Kingfisher Airlines (2005)
IndiGo (2006) ✅
SpiceJet (2005) ✅
Vistara (2015) (merged into Air India)
Air India (legacy, revived under Tata Group)
Look at the early phase , nobody survive in early phase
Early Phase Indian Airlines (1992–2005)
List of Early Entrants
East West Airlines (1992)
Jet Airways (1993)
Air Sahara (1993)
ModiLuft (1993)
Air Deccan (1996 / rebranded as Deccan Aviation)
Kingfisher Airlines (2005)
IndiGo (2006) ✅
SpiceJet (2005) ✅
Vistara (2015) (merged into Air India)
Air India (legacy, revived under Tata Group)
Look at the early phase , nobody survive in early phase
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Similar example : THERE ARE PLENTY OF SOLAR COMPANY LISTED IN LAST 2 YR
How many can survive in long run ??
How many can survive in long run ??
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Wealthcreator
One more example based on Airlines Early Phase Indian Airlines (1992–2005) List of Early Entrants East West Airlines (1992) Jet Airways (1993) Air Sahara (1993) ModiLuft (1993) Air Deccan (1996 / rebranded as Deccan Aviation) Kingfisher Airlines (2005) …
One more example In telecom earlier many player
Now top 3 player control entire market
earlier 8 to 10 name
Now top 3 player control entire market
earlier 8 to 10 name
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