What are Bull Markets and Bear Markets?

If you are new to stock market investing, two terms you will hear thrown around a lot are “bull market’ and “bear market”. What do these terms mean and what does investing have to do with bulls and bears?

A bull market is when most people feel positive about the stock market and want to buy stocks. It is during long bull markets that the stock market keeps going up and up.

A bear market is the opposite and is when the stock market keeps going down no matter what. It is during these times that people lose sleep and continually wonder whether they should be selling their stocks.

During a bull market, you can probably make money from almost any stock. Everyone will want to give you their stock pick and chances are the stock will go up. All the pundits on TV will be pumping out their stock picks and you can most likely make money on any of them. Even your hair stylist may want to give you a stock tip.

If you start investing in stocks during a bull market you may get over confident. You may make money right away and think it is easy. This is something to be weary about if you are just starting to invest in stocks. It is not easy and things can turn around in a day.

During a bull market, everyone wants to sell. The stocks you own may go down 4 out of every 5 days. You will be confused and want to sell and wonder whether you should. Remember 9/11 when the stock market went down huge and kept going down for months after? Do you sell or do you hold? Will the stock market ever turn around? Do you buy more at a lower price? These are just a few of the questions that you will be faced with in a bear market. It is easy to invest in good times when everything is going up. The bear market times, on the other hand, are what seperates the pros from the amateurs. It is what you do during the down times that can make or break your investing year.

Most of the time the market is somewhere in between a bull and bear market. Usually the better stocks go up over time and the stocks of companies doing poorly go down. It is best to always try to pick stocks of companies that are doing well or will do well. Of course that is a skill that not too many posess. The stock market can be a confusing and scary place for beginners that takes a lot of time and experience to get used to.

Can Knowing The Basics Of Bull And Bear Markets Keep Your Stock Trading Profitable?

The stock market is called a ‘bear market’ when it moves downward for a length of time. When the market moves up, it is called a ‘bull market’. A poor stock is called bearish and a stock that is succeeding is called bullish.

Bear and Bull terms are used to refer to the varying conditions of the stock market. These are not words that refer to short term fluctuations. A bear market is usually known as one in which prices of important stocks have plummeted by 20 percent or more for at least two months. A bear market may still provide numbers that may increase for a time. The opposite of this market is the bull market. They are known for rising prices in key stocks for a period of time.

Most of the time, the stock market reflects the state of the economy. When a market is experiencing a bull market, the economy is in good shape, interest rates are decent, and unemployment is low. Bear markets occur in an opposite situation. Investors will shy away from the stock market and companies could begin to lay off employees. In the worst of times, the market may crash when a bear market leads to panic selling. In an exaggerated bull market, investors may be over enthused to invest and the market will flourish until the bubble bursts.

Even though large sums can be made during bull markets, opportunities also exist in a bear market. Investors need to begin by being educated by the characteristic of each type of market. If they are prepared, they can make profits in both markets. Most buyers want to buy their stock in a bull market because the economy is doing well and they have more money to invest. A short supply exists when there is high demand, and this drives up the price of the stock. In a bear market prices on stocks fall and investors choose to pull their money and invest in fixed return items. When money is taken out of the stock, supply exceeds demand, and the stock loses even more value.

Many consider the best time to make money is when the stock is in a bull market. The investor needs to be prepared to jump in right away to make the most profit. During the bull market, dips in investments are typically not permanent and will soon be adjusted. The elevated prices won’t last forever, so it is up to the investor to decide when the market has reached a peak and sell at that time.

Bear markets provide opportunities to buy stocks at a bargain price. The best time to buy is when the bear market is coming to an end. Before the stock market recovers, prices will likely fall before they are restored. Many stock traders call this “picking a bottom” and it is certainly easier said than done. Another investment strategy is to sell short during the bear market. To do this, you must sell stock that is not your own, in the hopes that the price drops lower. If this happens, you can buy the stock for less than you sold it and make a profit.

How come investment dealers don’t teach their brokers that bear markets always follow?

bull markets, during the brokers training period?
Why has no one in this industry never been acquainted with the concept of bear market?
Wouldn’t that be helpful to teach brokers about bear markets so they could preserve their clients money during bad times in the market?

Bull and Bear Markets Explained

Have you ever wondered what a bull and bear market is? The stock market can be tricky as stocks are constantly going up and down. When the market is going down it is referred to as a “bear market”. When the market is going up it is referred to as a “Bull Market” Then if any particular stock is doing well it is referred to a bullish stock.

So the words Bull and Bear describe the general conditions of the stock market. They do not describe the daily or short term fluctuations. So these terms would describe the condition of the market over a longer period of time, such as two months. That does not mean to say that the market may go up or down during that period. It is more to say that the overall general performance of the market is termed as Bull Or Bear over a given period of time.

Bull and bears not only describe the market condition they also reflect the state of the economy. In a Bull market the economy is doing well. The opposite holds true in a bear market. The reality of these terms is a general indication of the state of a given pattern on the stock market.

It is generally known that most of the money is made during a bull market. That does not mean to say that there is no money to be made during a bear market. Opportunities lie within both markets. The key then is to understand the state of play so that you can execute trades that will make you money. After all that is why people trade on the stock market. When understanding this as the fundamental reason for trading then it is necessary to gain knowledge on how to execute a plan of trading that will yield a return.

However without a shadow of doubt it is always easier to make money on a bull market. So when starting out you may want to just focus your attention here so as to increase your odds of making money.

The reality of bear markets is timing. Getting in at the right time when the price is at bottom. Then the only way is up. You should always be prepared for short term losses. Trade logically not emotionally. Be careful out there and do your homework.

Recesions and Bear Markets!

BEING STREET SMART
___________________

Sy Harding
RECESSIONS AND BEAR MARKETS! October 17, 2008.

In a speech on Tuesday, Fed Governor Janet Yellen became the first senior member of the Federal Reserve to proclaim that the U.S. economy is in a recession.
Last fall, and again in January, I outlined why I expected a recession would begin this year, and why it would probably be “the worst in 25-years, much worse than the mild recessions of 1991 and 2001, which most people remember as typical recessions.”
Wall Street and the Federal Reserve said otherwise. Until just a couple of months ago the majority of economists, and the Federal Reserve, assured Main Street and investors that we were in for slower economic growth, but not a recession. Over the summer, assurances continued that only slower growth, but not a recession, was all that lay ahead.
Small business owners and folks on Main Street knew better, thought we were already in a recession. But as it had with the problems in the housing bubble, banking crisis, and bear market in stocks, the Fed also kept its head in the sand (or was it in the clouds) regarding the economy.
Then two weeks ago, in a move coordinated over a weekend with global central banks, the Fed rushed out with an emergency rate cut to help stimulate global economies, and the possibility of a recession entered Fed Chairman Bernanke’s vocabulary.
Aimed at calming global markets, that emergency rate cut seemed to have the opposite effect, indicating to investors that central banks were panicked, that the situation is worse than was thought. The Dow plunged 995 points over the next three days.
The Dow has since recovered most of that three-day decline, amid extreme volatility.
But the expectations for the economy have darkened. Not only has the consensus opinion now become that the U.S. is already in a recession, but that it is global, worsening, and will not be brief and mild as were those of 1991 and 2001.
In my January outline, and repeated a few times since, I said it wasn’t rocket science to believe the worst housing meltdown in 30 years, the worst financial system crisis since the Great Depression, the bursting of the worst consumer debt bubble ever, the greatest government debt exposure in history, and a few other ‘worst ever’ conditions, would result in a worse than usual economic recession.
The mild recession in 1991 lasted nine months and the unemployment rate reached 7.8%. The recession of 2001 lasted eight months, and the unemployment rate reached only 5.8%.
The two previous recessions of the last 25 years were those of 1973-75, which lasted 16 months, in which the unemployment rate reached 9.0%, and that of 1981-82, which also lasted 16 months, and in which the unemployment rate reached 10.8%.
If we are just entering a similar 16 month recession, it would not end until early 2010. The unemployment rate, already 6.1%, would likely wind up being similar to in those previous more serious recessions.
That ties into a few of my other forecasts, that the stock market is in a serious bear market, which will see its low for this year in the October/November time-frame, but will not see its final low until 2009 or 2010. That, like the bear markets of 2000-2002, and 1973-74, this one will also last for upwards of three years.
Looking back to the bear market of 2000-2002, the S&P 500 declined 50% in total, the decline interrupted by three bear market rallies, of 17%, 19.5%, and 17.5%.
In the bear market of 1973-1974 the S&P 500 declined 45.2% in total, the decline interrupted by two bear market rallies, of 17.4% and 13.4%.
So let’s refine my forecast for the current bear market a bit more.
The market has become much more volatile in this bear market – like you don’t know that, given the frequent 5% to 10% one-day moves in both directions. And its initial decline this year has been more substantial, to more deeply oversold conditions, than the declines in the first year of the 2000-2002 and 1973-74 bears.
So I expect the bear market rallies will be more substantial, probably as much as 30% or more.
If I am correct with the forecast of a low this year in October/November, possibly already seen, and then a resumption of the bear market next year, it follows that it will likely be as important next year as it was this year for investors to become comfortable positioning for market declines. Bear-type mutual funds and ‘inverse’ exchange-traded-funds are likely to again be the source for larger and easier profits than the bear market rallies.
But short-term, the market is potentially oversold, investor sentiment is at record levels of bearishness, and fear among investors and on Main Street is similar to that seen near significant stock market lows.
So, we should soon see if the second half of my prediction for this year will also come to pass, after the low in the October/November time-frame for a significant rally to year end.
We are watching our charts and buy/sell indicators closely with that in mind.

Sy Harding publishes the financial website www.StreetSmartReport.com and a free daily Internet blog at www.SyHardingblog.com. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beating the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!