I’ve written about my investments on forex, equity fund, and the stock market, and I thought it’s important to discuss the difference between bull and bear markets for us to better understand and help us in setting our expectations when news outlets announce a bullish or a bearish market. Another excellent benefit of knowing this is that it will make you look smart during discussions with your boss and the executive team at the next company night out.To better understand, let’s go back to the basics. How did the two counterparts get their names in the first place? Answer: The natural actions of both metaphorically reflect the upward and downward movements of the market. When the bull attacks, it thrusts its horns up in the air, hence the upward movement (Bull market). On the other hand, the bear stomps its victim down to the ground, hence the downward movement (Bear market).
The Bull market is driven by the investors’ strong market outlook, and when they have a bullish outlook, they increase investing. Increased interest in investing and actual investing creates demand. And as explained by our Economics professor, when the demand is high, market price goes up.
On the contrary, the Bear market occurs when the stock prices generally decline. This downward movement may cause investors to withdraw from their investments, leading to a further decrease in prices.
As an investor, one must be able to identify when a bull or a bear market occurs, so one can maximize profits on a bull market, and maximize opportunities and minimize risks during a bear market.
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