BULL AND BEAR

An Overview of Bull and Bear Marketst

he terms "bull" and "bear" are frequently used to refer to market conditions. These terms describe how stock markets are doing in general—that is, whether they are appreciating or depreciating in value. And as an investor, the direction of the market is a major force that has a huge impact on your portfolio. So, it's important to understand how each of these market conditions may impact your investments

Bull Market

bull market is when the buyers are optimistic about the rise in the prices of the shares. It is the time when the share prices are rising because the economy is doing well, the GDP is rising, and the unemployment level is low. It gives the investors’ confidence that the share prices will rise and they tend to buy more shares in the market. The investors who are optimistic and buy shares at this time are called “Bulls.”

Bull market is a market that is on the rise and where the economy is sound; while a bear market exists in an economy that is receding, where most stocks are declining in value.

Although some investors can be "bearish," the majority of investors are typically "bullish." The stock market, as a whole, has tended to post positive returns over long time horizons.

Since it is hard to time a market bottom, investors may withdraw their money from a bear market and sit on cash until the trend reverses, further sending prices lower.

Bear market

A bear market is when the buyers are pessimistic about the rise in the prices of the shares and the sellers outnumber the buyers in the market. A bear market is due to the economy not doing very well; the GDP levels are falling, unemployment is high, and there is a fair chance that recession is approaching. When the investors are pessimistic, they tend to sell their shares rather than buy new ones and thus, are called “Bears.”