Psychological stages in the market:
1. Surrender:
- This phase shows a period of sharp price decline, where investors sell their holdings at significant losses, resulting in an increase in unrealized losses. For example, 2011-2012, 2014, and 2018.
2. Hope/Fear:
- At this stage, the market begins to recover slowly, with prices rising slightly and unrealized losses decreasing, balancing between hope and fear. For example, 2012-2013, 2015, and 2019.
3. Optimism/Anxiety:
- This phase is characterized by a significant increase in prices and the emergence of unrealized profits, but with some anxiety about a potential recession. For example, 2013, 2016, and 2020.
4. Belief/Denial:
- During this phase, prices continue to rise, unrealized profits increase, and reinforce the belief that the upward trend will continue. For example, 2013-2014, 2017, and 2021.
5. Euphoria/Greed:
- The market peaks at this stage and unrealized profits are at their highest, reflecting the extreme greed of investors. For example, late 2013, late 2017, and late 2021.