Bulls and Bear in Stock Market |
| In order to understand the concepts of Bulls and Bears, you need to first know what they are. These terms can be used when describing various funds or stocks. |
| In simplistic terms; A Bear is an operator who expects the prices of shares to fall; he will make careful choices and is pessimistic regarding the market. A Bear Market is where the market is weak and falling, and where buyers are nowhere to be seen. You needn’t be afraid of bear market indications, when prices fall they will eventually rise. |
| On the other hand, a Bull is an operator who expects to see the prices of shares to rise, he is very optimistic and aggressively buys, then takes his position to sell at the right moment, a Bull market sees share prices rising and one where the buyers by far outnumber the sellers. |
| Driving Bear and Bull Markets |
| World economic factors affect the stock market. Investors tend to put more money into the market when employment levels are high, and when the economy is strong. These factors create a stable social and economic market and the investors confidence rises, and this in itself can create bull markets. Bull markets are capable of self-perpetuating, when the market is thriving, investors invest. |
| The opposite is also true; a bear market can be self-perpetuating. When sudden instability, high unemployment, even social political changes hitting the economy we see investors taking the more cautious view which leads to a bear market. |
| Predicting Bear and Bull Markets |
| There isn’t a way to predict the market, though understanding "what goes up must come down" and vice versa will help. There is not a precise method, however, we can study the market and take note of general economic situations that give some indication. |
| For instance, should a country wage war upon another and are convinced that they will win; they could plough a lot of money into companies, creating jobs. This will boost the economy and a bullish market may ensue. In contrast, an international crisis will not gain the confidence of investors and a bearish market will prevail. |
| Watch the news, study the indexes, if you see a sudden change in percentages this will give you indicators as to where the market is heading and you can react appropriately. |
| Market Conditions in Both Cases |
| Referring to markets as either bull or bear, does not take into account types of specific markets conditions that do exist in both markets. eg, a bullish market can be accompanied by an increase in the demand of securities. This is due to more investors being willing to buy securities while fewer wish to sell. This pushes prices higher, whilst the opposite occurs in a bearish market. |
| And we mustn't forget the investors; their behaviour contributes to the conditions set for the markets. In a bullish market, investors are far more interested, more optimistic with the economic conditions and, hoping for increases in profits, they invest more. A bearish market has the opposite effect on investors; they are pessimistic and invest less. |
| Investing during Bear and Bull Markets |
| When you first embark on the wonderful journey of investing, many will avoid investing in a bear market. Most tend to wait for the bull and buy, buy, buy. However, in time you will learn how to invest, regardless of whether the market is bull or bear. The trick is not to panic, but to do your homework and wait patiently for the right investment for you. |
| You will see many investors take advantage of the bull market; they buy as soon as they can and sell when the prices appear to have reached their peak. The chances of making a good profit is good, but many investors take too many chances, the problem of the situation arises when the reality of the impossibility to predict when the 'bull' market begins and when it will end. |
| When you see prices falling the risk of losing is higher, and it there is no telling when the bear market will end. If you decide to invest in these conditions be prepared to suffer some loss before the bullish market returns. |
| During the course of bear markets many investors choose to invest with fixed income securities or short selling. Defensive stocks remain stable during bearish markets making them a good option. |
| Many investors see the bearish conditions as ideal opportunities for investment. They watch as others sell their stocks at low prices, some of these stocks could include blue-chip stocks, and see the buying of them as ideal long-term investments. |
| Always keep your cool! |
| Intraday Trading | Bombay Stock Exchange - National Stock Exchange |
