Meet The Investment Alphas – Your Guide to Bull and Bear Markets

Meet The Investment Alphas – Your Guide to Bull and Bear Markets

If you have heard the terms ‘bull market’ and ‘bear market’ but not been entirely sure what they implicate, then you are in the right place. Further to this, you are not the only investor who has pondered both the relevance and the potential significance of each one. Perhaps you have done some initial online research and not found the clear answers you were hoping for. Within this article, we are going to explore what each of these key terms really means—including the benefits they can potentially offer your current financial position.

Within an economic context, bull and bear are investment terms. They are commonly and frequently used within the investing world to describe the conditions of the market itself at any one time. Essentially, they are terms that define how well a market is doing in a general sense for quick reference and communication. Perhaps the demand is skyrocketing, or it might have suddenly plummeted due to unforeseen depreciation.

As the age-old saying goes, time is money. Therefore quick terms such as bull and bear and similar can be very useful when you need to get straight to a point within a pressurised timeframe or environment. Further to this, if you are serious about investing in the short or long-term future, you need to get comfortable with the terminology. Thankfully—this guide article to bull and bear markets are here to make your life a great deal simpler and easier to get to grips with.

Let’s Start With the Bull.

A bull market is fundamentally an investment market that is on an upward rise. The economy-related to it is deemed sound and reliable—termed as ‘bullish’ many investors actively pursue these markets with aspirations of seeing positive returns within such a potential positive environment. It is most commonly used in reference to the stock market, but equally, it can be applied to anything that is traded, including real estate, currencies and commodities.

Bull markets are typically defined by the market behaviour of rising price values over a sustained period. Essentially—a bull market indicates inflation in the price of a particular company’s shares. When this occurs, investors can feel encouraged that the upturn will hopefully continue over a longer or more sustained period. In such a market situation, the local or national economy is understood to be reliably strong with high employment levels and similar supporting factors.

Okay—Now What About Bear?

Invariance to the bull market, a bear investment market is understood to be riskier. It is experiencing ongoing price declines. They are a complete contrast to the bull market. They are commonly understood to be more dangerous to invest in, with equities losing value and price levels becoming volatile and relatively unpredictable as a result. Many investors choose to withdraw their money when they observe bear market behaviours, preferring to reserve their funds until the market shows more positive recovery and potential prosperity.

Any particular market in any economic context is only considered a bear market when it has fallen 20% or more from any recent highs it has experienced. Within a bear market, share prices are continually and consistently plummeting. The apparent drop is consistent and significant. The downward trend indicates to investors that such a trend will continue making them undesirable to both new and established investors of all portfolio size.

Interestingly, this shared belief and common understanding further contribute to the economy slowing down even further as investors withdraw their funds. The environment is deemed inhospitable for further investment at that time. The unfortunate side effects of bear markets are the laying off workers and similar spending by the company as it attempts to cut losses and recover as a profitable organisation.

The Investor Psychology You Need to Know.

Because the way ultimately determines the behaviour of a financial market, each individual investor or market expert perceives and reacts to the current behaviour of it. Investor psychology and personal feeling hugely affect whether a market rises or falls, especially when the investment they make (or do not make, as the case may be) might be. Within an established bull market, for example, investors will likely invest heavily in pursuing their aspirations of significant profit experience for themselves.

Fears born from previous experience of sizeable financial loss can implicate an investor to rapidly withdraw funds or cancel investment plans where a bear market becomes apparent. They may choose to hesitate in investing, meaning the market plummets even further than it already has done. Any decline in stock market prices tends to implicate investors keeping their money out of any such particular declining market on either a temporary or permanent basis. No one wants to lose money—and this fundamental feeling will always be the underpinning of any investor’s financial decision making.

Essential Knowledge for Bull & Bear Beginners.

Bull and bear markets both equally have a significant impact upon investment decision making. Before you rush ahead and dive into an investment of any kind, it is extremely wise to familiarise yourself first with the health of the market you are considering putting your money into. Seeking the advice of a qualified financial advisor experienced in market investment will provide the information and reassurance you need to thrive within your endeavours. Accessing the right kind of support from the proper teams will lead you to the success you hope to achieve in the short and long term future—bull and bear markets all considered.


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