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These markets have nothing to do with wild animals! They are names given to market trends that hold out for a significant period of time on the stock market. Stock markets rise and fall every day. Usually a percentage of the market movement is given at the end of the day’s trading. This percentage could be a positive or negative change.
* A bear market is characterized by a downward trend in the stock market that can last for months or even years. It is a market in decline. This condition means that the prices of securities are falling or are expected to fall. A bear market is said to be happening when there is a negative downturn of 15% or more. A bear market can instigate a slowing in the economy.
* A bull market is the opposite of the bear market. Here you will see an upward trend over months or years in the stock market index. It is a market on the rise. This usually happens when a country’s economy is strong and unemployment is low.
A bull market is an optimistic market, with investors showing confidence in their stocks and wanting to buy more shares. This will push up the price of shares as more people want to get in on the good action. Investors can expect strong returns on their dividends in a bull market. Eventually, however, a bull market will be followed by a bear market. Good things can’t last forever! Now more people will want to sell their stocks and less people will want to buy, so share prices will drop.
The good news is that the bear markets do not tend to last as long as the bull markets, but you must be prepared for when the market does slow. If you can anticipate the bear market, you may even be able to profit from it. Can you change some of your stocks into cash and invest them elsewhere? Or can you hold out while the market is on its downward slide? It’s wise not to panic sell your stocks at a low price.
During both the good (bull) and bad (bear) times, keep hold of your strong stocks. If they give good returns on your investments, don’t be hasty to get rid of them. If you get out of the market completely when the trend is downward, you may miss out when it turns in to a bull market. When the bull market is active, you can be more confident and invest in more shares, knowing that the probability of making good returns is much higher.
Predicting market trends is difficult so remember to invest in solid stocks. Bear and bull markets are inevitable so research your markets before investing. On the whole, history has shown that the market does give a positive return. Invest wisely and you too can enjoy the positive dividends.
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