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Coming in at a close second is the bull market from March 2009 to present. To put this into perspective, the average return of all bull markets since 1932 has only been 165%. When stock prices are rising and optimism abounds, how do you decide where to invest your money? Many investors are willing to take on more risk in a bull market, but you may want to think carefully about your personal risk profile and have a long-term strategy in mind. The three main causes of a bear market are decreased investor confidence, economic recession, and high-interest rates.


For example, an increase in for foreign products results in more imports, resulting in foreign currency investing, resulting in domestic currency depreciation. Market IndexesA market index tracks the performance of a diverse selection of securities that make up a significant part of the financial market. It serves as an indicator of the overall financial market condition by listing the historical and real-time trends in different market segments.

  • In contrast to the bull market, the SEC defines a bear market as a time when stock prices are declining and market sentiment is pessimistic.
  • Markets rise and fall and phases of bull runs and bear periods occur; how you maneuver the journey will determine whether you are going to emerge a winner or a loser.
  • AxiTrader is not a financial adviser and all services are provided on an execution only basis.
  • As a result, the broker lends funds to investors to facilitate the buying of the share.

Shorting means people are expecting the price to go down and, therefore, borrow the share from the broker to sell it. And, when the price starts falling, traders or investors start to make money. In a bullish market, the market indicators are very strong and vice versa in a bearish market. It is an indicator measuring the number of stocks increasing versus those which are falling. If the index is greater than 1.0, this indicates a future rise in market indices. On the other hand, if the index is below 1.0 it means a future decline.

What is Bull and Bear Market?

A bull market is a term given to a stock market condition when it is rising or expected to rise. It is generally said that as markets scale up over time, without falling for more than 20% from its previous 52-week peak, it is considered as a bull market. Similarly, the term bear market is applied to the market condition when it is expected to fall, or it falls broadly by 20% from its peak. In the investing world, the 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.

As, it is important to understand what a “bull” or “bear” market actually is. Their lengths varied wildly, with one lasting just six months and another nearly three years. The worst of them saw an 83% drop in the S&P 500, while the other end of the spectrum represented a 21.8% drop. How long bear markets will last varies wildly depending on the specific situation. Some can last for just several weeks, while some bear markets can last years.

Bull Market vs Bear Market – All You Need To Know

Investors must know when to buy and sell to maximize their gains and attempt to time the market. Historically, bear markets tend to be shorter than bull markets. The average length of a bear market is just 289 days, or just under 10 months.

bullish and bearish

During a bear market, which is a steep drop in stock prices, you’ll typically also see low investor confidence and a perception that the market is risky. In a bull market, which is a continued rise in stock prices, you’ll likely see high investor confidence and a perception that there’s a strong economic environment. In a bullish market, the liquidity flowing in the market is vast, and investors continue to pump more funds with increased trading activity and invest in stocks, gold, real estate, etc. Still, the liquidity dries up in the system in a bearish market, and investors are reluctant before making any commitments. The investments made during a bullish scenario are either sold, preventing further downsides, or holding back to them for future usage. There are a lot of terms that are used in Equity or Share markets.

What Is a Bear Market?

A market could happen when stock prices fall about 20 percent from their recent highs, whereas a bull market happens when stock prices rise about 20 percent from the recent lows. In this article, we’ll explain bull markets and bear markets, the differences between them, and what they mean for everyone—not just stock traders. The main difference between a bull and a bear market is the direction of prices. A bull market is when prices are rising, while a bear market is when prices are falling. If you’re thinking about investing in the stock market, there are a few things you should keep in mind.

There is no guarantee that any strategies discussed will be effective. As of June 2022, the S&P 500 was considered by investing experts to be in a bear market, with the value of the stocks it includes having fallen 22.2% below its record high set earlier in the year. While the duration of a bear market is difficult to predict, the S&P 500 has regained and exceeded its value after every bear market in the past. Many experts recommend that investors hold onto their stocks and ride out the market dip. Ultimately churning portfolio as per the phases of the market helps you make money. Bear market is for investing more, while the bull market is to reap returns.

The longest bull market lasted from 2009 to 2020 and resulted in stock growth of more than 400%. No offer to buy securities can be accepted, and no part of the purchase price can be received, until an offering statement filed with the SEC has been qualified by the SEC. An indication of interest to purchase securities involves no obligation or commitment of any kind.

In a bullish market, prices rise steadily over time as investors become more confident in cryptocurrency or blockchain technology. In such markets, new coins and tokens become popular as they attract a lot of investment interest from novice and experienced traders alike. Institutions also tend to enter the market in a bull market, further increasing the demand for cryptocurrencies. In the long term, the markets “weigh” the substance of the underlying cash flows and value. During bull market trends, investors become overly optimistic about the future bid up prices beyond the reasonable aspects of the underlying value.

However, this is not the only explanation behind why it is called a bull but is the most popular belief. While both Bullish and Bearish are a trend seen in the stock market, there are people making money in both trends. As a noun, bear can refer to a person who believes that market prices, especially of stocks, will decline. This is why most financial experts advise against trying to time the market. Instead, they recommend investing for the long term and not worrying about short-term fluctuations.

Some of these terms might confuse people who are just starting to invest their money in shares or plan to do so. Not just the advanced terms like stop loss and margin can be a challenge at the beginning, but also the terms defining different trends in the market could prove difficult as well. Both these are the most popular share market terms and define the sentiment of the investors and the performance of the overall market. To better understand both the terms and their usage, we need to understand the differences between the bull market vs bear market.

prices rise

Our online trading courses are provided as a tool to learn different ways to trade in different markets. There can be a number of factors that can cause a bull market. However, two that come to mind would be a strong economy coupled with high employment levels. All the types of asset classes will rise for a period of time. Factors that affect the bull market are when there is a strong economy and when there are high employment levels across the board. If you purchase this plan, you will receive Financial Counseling Advice which is impersonal investment advice.

Investors can buy and sell in the share market irrespective of whether it is a bull or bear market. However, the market usually sees more buy orders during the bull market, while the bear market sees more sell orders. During the bull market, investors expect the share price to increase, and therefore, they start buying the shares. Whether it’s better to buy stocks in a bull vs. bear market isn’t a simple question; every market is unique, as are each individual’s circumstances. Investing in any kind of market comes with risk, including the risk that you could lose money, so it’s important to understand best practices for investing in both bull and bear market phases.

Bull Market Indicators in Stock:

In SIP mode, irrespective of the market condition, an investment of INR 10,000 was made monthly and a number of units were purchased. Effectively, during the bearish periods, more units were bought and during bullish periods, the value grew. When the stock market is dominated by bulls, the economy grows, while, if the bears dominate the market, the economy declines. More specifically, however, a bear market describes any stock index or individual stock that drops 20% or more from its recent highs. A bull market, on the other hand, typically rises 20% from recent bear market lows and reaches record benchmark highs. In the first phase, Investor sentiment and prices of securities are very high, but the investors are extracting maximum profits and exiting the market.

Check out our stocks lists page if you’re looking for stocks to trade in any market. In fact, we have a gold stocks list for just such the time as a bear market occurs. Therefore, it’s important to know what is the difference between a bull and bear market. In fact, bear markets can be a great thing because, in essence, stocks go on sale. However, it can be a little hard to tell when the bottom is formed. Robo-advisors are digital financial advisors that automatically select and manage your portfolio based on your investment preferences.

Just like the economy and job growth simulates a bull market, a bear market is spurred by the opposite. In a bear market, the investors or traders are not involved in the stock market and want to get out of the holdings to reduce the losses. For making a start in trading or investing in the stock market it is necessary to know the basic terminology of “Bull” and “Bear” and why it is used in the share market. These terms are the indication of the market movements and are an important factor to understand for the beginner. Investing in the bottom of a bear market and selling shares in the peak of a bull market is a dream hardly any investor achieves. Invest in a staggered manner, that is, at different index levels in a bear market, while keep booking profits as per your needs when in a bull market.

Bullish traders typically buy stocks when the market is trending upward and sell them off when they start to decrease in value, which leaves profits on their hands during a bull run. Bearish investors normally do the opposite by selling shares of stock after it increases in price and then buying more once its reaching it’s low point again. A bear market is an economic downturn that can lead to a major drop in stock prices, forex pairs, commodities and other financial instruments.

Even if you do decide to invest with the hope of an upturn, you are likely to take a loss before any turnaround occurs. Thus, most of the profitability can be found in short selling or safer investments, such as fixed-income securities. In a bull market, the ideal thing for an investor to do is to take advantage of rising prices by buying stocks early in the trend and then selling them when they have reached their peak. 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. Market changes, such as in bull and bear markets, can be distressing but can serve as unique opportunities if you have a plan. At times, the market can be volatile, which can play on emotions.

FMCGFast-moving consumer goods are non-durable consumer goods that sell like hotcakes as they usually come with a low price and high usability. Their examples include toothpaste, ready-to-make food, soap, cookie, notebook, chocolate, etc. Disposable IncomeDisposable income is an important mechanism to measure household incomes, and includes all sorts of income such as wages and salaries, retirement income, investment gains. In other words, it is the amount of money left after paying off all the direct taxes. The situation was so optimistic that stocks were purchased on Margins, i.e., on loaned money. There will be a massive demand for Call options in the derivatives market since the overall sentiment is upbeat.

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