Bull Market Vs. Bear Market? What You Need To Know

If you’ve been around for long enough, you can’t have failed to notice that the economy goes through booms and busts, and these are known as bull markets and bear markets for our investments.

The two names might sound similar, but trust me, the two phenomena are worlds apart. Let’s take a look at what bear and bull markets are, what to expect from them, and how to react to them for maximum profit.

Types of Bull Markets

- Stock bull markets - Gold bull markets - Bond bull markets - Foreign exchange bull markets - Secular bull markets

What Is a Bear Market?

As they say, what goes up must come down — and that downward movement is encapsulated in bear markets. The mechanisms here are very similar to those found in a bull market, except for everything that happens in reverse: prices decline, so more investors sell, resulting in prices continually decline. As a result, you can expect slow growth and high unemployment in addition to declining prices.

Understanding Bull Markets and Bear Markets

Bull markets and bear markets shouldn’t be looked at in isolation — they both form part of the economic cycle. During the economy’s expansion, the bull market is in full swing; then, after it reaches its peak, it creeps into a bear market.

How Should You React to Bull Markets and Bear Markets?

One thing you should have picked up on by now is that you can’t have a bull market without a bear market, and vice versa — the two are complementary and natural, so there’s no need to be afraid of the lows. Eventually, chances are that your investments will regain their lost value.

But a word of caution: don’t go thinking that bear and bull markets are easy to predict and exploit for money. The market trends might seem clear as day in retrospect, but it rarely feels that way in the heat of the moment.

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