The Cycle of Investing Understanding the cycle of investing may help you avoid easy pitfalls. Share | Related Content Bursting the Bubble Tulips were the first, but they won’t be the last. What forms a “bubble” and what causes them to burst? A Look at Diversification Diversification is an investment principle designed to manage risk, but it can't prevent against a loss. 5 Smart Investing Principles Principles that can help create a portfolio designed to pursue investment goals.