It's a Money Thing®
Stock Market Trends
Bulls and bears are considered the unofficial mascots of stock markets around the world and are used to describe market trends.
They represent the upward and downward movements of the stock market over a period of time and have even come to describe investor behavior.
Trends can be short term, intermediate term, or long term, and can apply to the market as a whole or to a single stock or commodity.
Both bull markets and bear markets represent opportunities to make money; the key to success is to use strategies and ideas that can generate profits under a variety of conditions. This requires consistency, discipline, focus, and the ability to take advantage of both pessimism and optimism.
In a field typically known for its confusing financial terminology and often uninspired language, the bull and bear symbols really stand out.
A Bull Market is a period of generally rising prices.
A typical bull market lasts 8.5 years, with average annual gains of 14.9% to 34.1%. This adds up to average total returns of 458% per bull market period, according to findings from an analysis of stock market data by Morningstar from 1926-2014.
The start of a bull market is marked by widespread pessimism. This is the point when the crowd is the most bearish. The feeling of despondency changes to hope, optimism, and eventually euphoria, as the bull runs its course.
This often leads the economic cycle, for example in a full recession, or before a recession starts.
The bullish investor refers to someone who buys up lots of stock and is optimistic about the future.
A Bear Market is a general decline in the stock market over a period of time.
A typical bear market lasts 1.3 years, with average annual declines ranging from -19.7% to -47%. This equals an average decline of -41% per bear market period according to findings from an analysis of stock market data by Morningstar from 1926-2014.
A bear market is a transition from high investor optimism to widespread investor fear and pessimism.
According to The Vanguard Group, "while there's no agreed-upon definition of a bear market, one generally accepted measure is a price decline of 20% or more over at least a two-month period."
The bearish investor sells lots of stock and tends to be pessimistic about the future.
Markets trade in cycles, which means that most investors will experience both the bull and the bear in their lifetime. The key to profiting in both market types is to spot when the markets are starting to top out of when they are bottoming.
If these investment strategies seem complex and hard to understand, don't feel bad- they are complex and hard to understand! Professional traders, stockbrokers, and fund managers spend their time analyzing the markets and looking at key indicators. Even experts aren't always able to predict the next bull and bear markets.
Remember- investing can be risky. Investments made in stocks or commodities carry the risk of losing money, even when made through a financial advisor or financial institution.
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