Bull market and bear market (bull vs bear)

 Bull market and bear market (bull vs bear)


You may have heard about the bull market and the bear market and may have seen the famous Charging Bull statue near Wall Street in lower Manhattan. But what do these animal metaphors mean to you as an investor? Knowing the difference between a bull and a bear market can help you build a long-term investment strategy that aligns with your risk profile, and also in knowing how to identify market conditions to sort through the pundits’ claims more easily.

Bull and bear markets
Bull Market: The bull is advancing confident that it will reach its target, and this situation embodies the idea of ​​a bullish market. Strictly speaking, a bull market is when the price of a stock or other security on an index, such as the Dow or the S&P 500, has risen by at least 20% for at least two months.
Bear market: The metaphor likens the market to a hibernating bear. Literally, it is the period when prices on an index fall by 20% or more in at least two months. A bear market may sometimes follow a bull market, but this is not always the case.
Investors and commentators use these words informally, they might say “it’s a bull market” to indicate that stocks are going up, or a “bear market” when stocks are down. You may also hear people use the terms “bullish” and “bearish” to indicate that a market or investment is currently increasing or decreasing.
The difference between bull and bear markets
Why does it matter whether a market indicator is bullish or bearish? Well, it is all about understanding the market and trying to predict its future behaviour.
When stocks rise during a bull market, it usually means that the economy is strong and investors are confident, which drives up demand for the securities. During a bear market, investors are generally pessimistic and do not feel confident about the economy, which may lead them to sell their investments. Lack of demand leads to market selling, with markets trending down.
When you are thinking about investing your money, whether it is a bull market or a bear market may not be very important, because it is likely that both will happen over time. What you need to do first is to develop your investment strategy, taking into account the risk profile and time horizon, to ensure a sound and effective investment.
Is it a bear market or a market correction?
When markets become increasingly volatile, it may appear that a bull market is turning into a bear market. But in some cases, this is actually a downward spiral called a market correction, which occurs when indices fall 10% or more from their previous high.
Some corrections end up as single, one-time corrections that nonetheless anger and unnerve investors, even the most confident of them.
Where did bull and bear markets get their name?
Etymologists, financiers, and ordinary investors have all wondered about the reasoning behind these labels. It is likely that the terms came into use in the eighteenth or nineteenth century, and then evolved over time to become what they are today.
In the late 1980s, artist Arturo de Modica created a sculpture of a charging bull as a symbol of virility and courage, which he began working on after the stock market crash of 1986. The NYSE subsequently moved unauthorized artworks away including this bull sculpture, but It was reported that the public was so fond of the statue that they demanded that it be returned to the original place where it remained to Yona.
Bull markets can be exciting, and bear markets annoying. This is why thinking in the long term can improve your investment strategy. Now that you have a better idea of ​​how to identify bullish and bearish market conditions by looking at financial indicators, you may be ready to get your investment journey right.
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