Bear market or bull market are terms often used in conjunction with financial markets. They describe the general trend of a market. Individual shares may go up or down during a day or even over a period of time, but the entire market also follows patterns. Many analysts have rules around what period they make market analysis over and the percentage rise or fall they consider indicates a market movement.
A bull market describes a market where prices are generally on the increase. A bull market often starts when market confidence is at its lowest. At this time investor confidence starts to increase and there is an expectation gains will be made on rising stock prices. This is happening now in the gold stocks market.
A bear market on the other hand is a trend in a downward direction. The entire market goes down, not just an individual stock.
Probably the most well known bear market was the decline after the 1929 stock market crash. Following this 90% of share values were wiped in less than five years.
Most bear markets work with the pattern where there is a large initial decrease in values which eliminates many of the speculators from the market. Then there may be a short period when prices rise and investors think the worst is over. This is then followed by a period when there is simply a sustained decline.
But after bear market comes a bull market. In a bull market there tends to be higher levels of trading. The key to making money is to buy a stock at lower price and sell it as it rises. But no one has a crystal ball and doing so is easier said than done.
Many investors forget markets are cyclical. It is possible to make money in both bull markets and bear markets but to do so requires some understanding of what sort of market you are investing in.
A bull market describes a market where prices are generally on the increase. A bull market often starts when market confidence is at its lowest. At this time investor confidence starts to increase and there is an expectation gains will be made on rising stock prices. This is happening now in the gold stocks market.
A bear market on the other hand is a trend in a downward direction. The entire market goes down, not just an individual stock.
Probably the most well known bear market was the decline after the 1929 stock market crash. Following this 90% of share values were wiped in less than five years.
Most bear markets work with the pattern where there is a large initial decrease in values which eliminates many of the speculators from the market. Then there may be a short period when prices rise and investors think the worst is over. This is then followed by a period when there is simply a sustained decline.
But after bear market comes a bull market. In a bull market there tends to be higher levels of trading. The key to making money is to buy a stock at lower price and sell it as it rises. But no one has a crystal ball and doing so is easier said than done.
Many investors forget markets are cyclical. It is possible to make money in both bull markets and bear markets but to do so requires some understanding of what sort of market you are investing in.
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