When I started my journey in the stock market, even I was not sure of a few terminologies related to this new world 10 years back. But with time, experience, & determination we can excel in any field. Our sole motto is to advise you how you can reap maximum profits so you should know these terms and their key difference with each other. In this series, today I’m going to explain to you What is Bull and Bear Market in Stock Market?
What is Bull and Bear in Stock Market?
When you trade in the stock market then you hear many times that the market is bearish or bullish. These are the terms related to market performance. In order to understand both market types and why are they termed so? Let’s understand the basic instinct of both animals to describe the market condition. A bull thrusts its horns upward, while a bear swipes its paws downward. These actions are metaphors for market movement. Therefore, to describe the market, if the market is bullish that means it’s going up. On the other hand, if the market is bearish it will go down. Now that we know how both animals react in hostile situations, let us apply the same strategy to the stock market.
Bull Market is a market condition that is on the rise and the economy of the country is doing favorably well. A bull market is defined by a steady rise in prices. A bull market in equity markets denotes an increase in the prices of company shares. During such times, investors frequently believe that the uptrend will continue in the long run. The country’s economy is typically strong in this scenario, and employment levels are high.
On the other hand, a bear market is one in which prices are falling. Typically, a market is not considered a true “bear” market unless it has fallen 20% or more from recent highs. Share prices are constantly falling in a bear market. This causes a downward trend, which investors believe will continue; this belief, in turn, feeds the downward spiral. During a bear market, the economy slows and unemployment rises as businesses begin to lay off employees.
Bullish vs Bearish Market in India
Historically it’s seen bear market tends to last shorter than the bull market. Don’t get deterred from the market condition, it’s recommended you hold a diversified portfolio that can survive the ups and downs of the market to meet your financial goals.
During a bull market, market confidence is high, and investors are eager to buy stocks in the hopes that they will appreciate in value. During a bear market, however, the opposite is true. Investors want to sell their stocks because they are afraid the market will crash.
Fear and greed are the most prevalent emotions when it comes to investing. We may become fearful if the stock market falls and we are tempted to sell our stocks. However, it is critical to wait it out.
Post the market goes bullish or bearish then the correction has to take place to reduce the impact of adverse market conditions. After being hit by the third wave of Novel Coronavirus our stock market is trying to get back on its feet after a few months of correction.
As there is the lifecycle of Humans so does the lifecycle for the stock market. Every bear market is followed by the bull market so investors don’t lose hope if the market is not performing well. “You should not change your investment strategy whether the market is in a bull or bear market,” says Barros. “This is especially important if you’re a long-term investor with decades ahead of you.” Don’t give up on investing. Continue to buy, and you’ll be able to ride it out and recover over time.”