Accumulation Quote by Michael Thomsett
““Trends consist of three specific phases. Every trend moves through three phases. The accumulation phase is the period when investors with exceptional information actively buy (in a bullish trend) or sell (in a bearish trend). The public participation phase occurs when, due to price movement caused by activity in the accumulation phase, the general public joins in the trend. Finally, the distribution phase occurs when speculators enter the market and over-buy or over-sell, and at this point the observant investor begins to transact in the opposite direction.””
About This Quote
Source Book: The Complete Guide to Market Timing, Michael Thomsett, 2014
Trends follow three stages: accumulation by informed investors, public participation, then distribution by speculators, prompting savvy investors to act opposite the crowd.
In simple terms: Markets move through three phases; smart investors go against the crowd.
Key Takeaway
Identify trend phases and act accordingly.
Themes
finance
investment
behavioral economics
market cycles
Mood
analytical
cautious
Type
financial
educational
When to use this quote
- stock markets
- cryptocurrency
- real estate
Key Concepts
trend analysis
speculation
contrarian strategy
Questions to Reflect On
- How can you spot the distribution phase?
- What risks exist in contrarian trading?
A Different Perspective
Assumes rational behavior among investors.
