The stock market of any country in the world is like a heartbeat that is unpredictable depending on different conditions. In this sense, the market will rise or fall, which in financial terms is referred to as a “bull market” when the general market situation is energetic and the stock market is rising. On the other hand, if the market moves downwards, it is referred to as a “bear market”.
A bull market is the point at which the economy is extremely fluid, the GDP of the economy is increasing and job creation is also on the rise. The determination of stocks is easier in a situation like general health is constant. If an investor is optimistic, it is said to have a “bullish outlook”.
A bear market is the opposite and the economy is in a period of recession in a prolonged period and the costs of the shares are falling rapidly. The choice of shares turns out to be extremely problematic and investors focus on making profits by offering shares (short selling). Despite the fact that someone with a cynical assumption is known as someone with a “bearish outlook”, many suspect that such a circumstance is impermanent and the signs of the revival stage are just around the corner.
History of Bull and Bear Markets
Bull markets generally tend to last much longer and have much higher yields than bear markets. Because the bear markets are so short and severe, it is impossible to consistently exit on time. In many cases, when people realize that they are in a bear market and start to get nervous, they are probably closer to the beginning of a bull market.
What to do?
In a bull market, investors should take advantage of rising prices by buying early and then selling later when prices have peaked. During a bull market, investors can invest in more stocks with a higher probability of obtaining a return.
In a bear market, the chances of loss are greater because prices are losing value continuously. Investors should sell short or make safer investments, such as fixed income securities.
- Bear and bull markets are named after how each animal attacks its prey. A bull usually drives its horns up into the air, while a bear slides its legs down on its prey.
- Bears and bulls were literally once fierce opponents when it was popular to put them in an arena to fight each other. Pairings with bulls and bears (either together or against other animals) took place in the Elizabethan era in London and were also a popular sport for spectators in ancient Rome.
- “Bulls make money, bears make money, pigs are killed” is an old saying on Wall Street that warns investors against excessive greed. Pigs are investors whose objective is to obtain the highest amount of money in the shortest time possible and it is known that they assume high levels of risk or that they ignore the risk to obtain profits.