The Four Market Seasons

The four phases are really a story of crowd psychology told in price: (1) Accumulation — after a long decline, pessimism is maximal, prices are low and flat, and “smart money” quietly buys from exhausted sellers (the bottom, where felt-risk peaks but actual risk is low). (2) Markup — price trends up; early optimism builds into broad participation; the uptrendThe prevailing direction of price: up, down or sideways. everyone eventually notices. (3) Distribution — near the top, euphoria reigns, the public piles in (FOMOFollowing the crowd — most dangerous at the extremes.), and smart money quietly sells to them; prices stall and churn at highs (where felt-risk is lowest but actual risk is highest). (4) Decline (markdown) — the trendThe prevailing direction of price: up, down or sideways. turns down; denial gives way to fearThe two emotions that move markets and ruin accounts. and then panic, prices fall, until exhaustion resets the cycle to accumulation. The deep insight: *these phases recur because human nature — fearThe two emotions that move markets and ruin accounts. and greed — never changes, so the cycle of accumulation → markup → distribution → decline repeats across every era and asset. Recognising roughly which season you’re in helps you act against the crowd at the extremes (buy in accumulation/pessimism, be cautious in distribution/euphoria). But humility is essential: phases are only clearly identifiable in hindsight, and timing them precisely is nearly impossible — use the framework for perspective and emotional context*, not for calling exact tops and bottoms.