Bear and Bull Market

Tuesday, March 16, 2010

The terms "bull" and "bear" are used to describe the market condition in the way as the animals attack their rivals. A bull pushes its horns up into the air while a bear swipes its paws down. These actions represent the movement of a market. If the trend is up, it's a bull market. If the trend is down, it's a bear market.

Bear Market

A market condition in which the prices of shares and securities are falling or expected to fall for a prolonged period upto 20% or more. As investors expect losses in a bear market and selling continues, cynicism only grows. Although figures can vary, for many, a downturn of 20% or more in multiple broad market indexes over at least a two-month period is considered an entry into a bear market. Bearish attitude can be applied to all types of markets including goods markets, stock markets and the bond market. Bear is a person who sells shares; he or she does not hold in the hope of buying them back at a lower price and thinks the price will fall. An investor who believes that a particular security or market is headed downward or exhibit a declining trend. Bears attempt to profit from a decline in prices. Bears are generally pessimistic about the state of a given market.

Bull Market

A bull market is the opposite of a bear market. It is a financial market condition in which prices of shares are rising or expecting to rise. The term "bull market" is most often used to refer to the stock market, but can be applied to anything that is traded, such as bonds, currencies and commodities. Bull markets can happen as a result of an economic recovery, an economic boom, or investor psychology. An investor who thinks the market, a specific security or an industry will rise. A bull market is slang for when stock prices have increased for an extended period of time. If an investor is "bullish" they are referred to as a "bull" because they believe a particular company, industry, sector, or market in general is going to go up.