Investment market cycles – how they work and what they mean for your super

4 June 2024

Investment markets move in cycles that can be challenging to predict. However, a basic understanding of how market cycles work can help you understand why your super balance might fluctuate from time to time. These ups and downs also highlight why a long-term view may be helpful when it comes to your super.

By looking at market cycles you can start to understand that market fluctuations are an expected part of long-term investing.

5 key phases of an investment market cycle

Market cycles are named cycles for a reason – they’re patterns that reoccur in investment markets over time.

There are 5 key phases within an investment market cycle:

  1. Early Upswing
  2. Bull Market
  3. Peak (top)
  4. Bear Market  
  5. Trough (bottom)

and then the cycle starts again.


The 5 key phases of a market cycle

Early Upswing

This is the phase after the market has bottomed out. It’s when the market is starting to recover, and prices are rising again. An improved outlook and cheaper prices attract investors back into the market. This stage can last weeks, months or several years.  

Bull Market

A Bull Market is when investor confidence is strong and prices are rising faster than average over a consistent period. Bull Markets typically (although don’t always) coincide with periods of strong economic growth, and investors are attracted to the potential of higher earnings. 
Peak (top) This is the top of the market, when prices are at their highest. Investors see limited further upside and the confidence seen in the Bull Market phase starts to level out. Investors start to think about when to exit the market by selling. Actual peaks can be hard to predict, but easy to see in hindsight. 
Bear Market A Bear Market is when the market experiences a period of falling prices. They are typically driven by negative investor sentiment and/or a poor economic outlook. They are often associated with economic downturn, for example the Great Depression and the Global Financial Crisis. The technical definition of a Bear Market is when asset prices have fallen by more than 20% from their recent highs. 
Trough (bottom) This is the bottom of the cycle, when prices and investor sentiment are at their lowest. 


How long is a complete market cycle?

A full market cycle is the period it takes to move through all five stages of the cycle. 

However, each of the underlying phases can vary significantly in length, sometimes lasting weeks, other times years. There is no shortage of underlying factors affecting each stage - examples include trade issues between countries, commodity prices, interest rates, investor sentiment, changing economic conditions and, of course, pandemics. 

As a result, market cycles vary in length. 


The impact of market cycles on asset classes

The performance of each asset class responds differently to the underlying factors as we move through the phases of a market cycle. This is usually a function of the amount of risk associated with investing in that asset class and how individual assets respond to economic conditions. 

Higher risk investments tend to perform well when markets are rising in the Bull Market phase, and have lower returns when markets are falling. 

In a Bear Market, for example, riskier investments such as shares often perform poorly in comparison to more defensive investments like fixed income and cash. 

For this reason, owning a diversified portfolio could help reduce volatility in portfolio returns and positively impact your super balance. 


AustralianSuper’s investment approach

AustralianSuper’s global investment team continually monitors and assesses economic and investment data to understand how different asset classes, sectors and companies are likely to be impacted through the stages of the market cycle. This enables the team to actively manage the asset allocation for each PreMixed option. By forecasting the next phase of the cycle, we are able to adjust the portfolio to take advantage of investment opportunities and manage the level of risk in the portfolio.   

The asset allocation and portfolio adjustment decisions are made based on each option’s investment objectives that include both return and risk objectives. For example, the Balanced option will be positioned to meet its objective of outperforming CPI + 4 % pa and the median balanced fund over the medium to longer term. By actively adjusting the asset allocation, AustralianSuper seeks to achieve these investment objectives and grow members' retirement savings over the long-term. 

Switching investment options

It’s important to remember that your super is a long-term investment, even for most people in retirement. While changes in your balance can be worrying, market fluctuations are normal (as we can see from the impact of market cycles on asset classes) and that’s why keeping a long-term focus is important. 

If you make decisions based on short-term considerations, you could end up worse off in the long run. This includes activities like switching investment options or withdrawing your super early, which can both have a significant impact on how much super you’ll have when you retire. 



Stay connected to your super

Market cycles affect your balance, and while it might be concerning to see your savings drop, you can also see them bounce back as well. The free AustralianSuper app lets you monitor your balance and review your investment options. You can also log into the member area of the site to review your details and see how your super is performing.

Investment returns aren’t guaranteed. Past performance isn’t a reliable indicator of future returns.

This may include general financial advice which doesn’t take into account your personal objectives, financial situation or needs. Before making a decision consider if the information is right for you and read the relevant Product Disclosure Statement, available at or by calling 1300 300 273. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at

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