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

The stock market can seem like a game of chance sometimes — you might wake up one day to find that your investments have grown by 5% overnight, then six months down the line, there was an unexpected crash, and you’ve lost all your gains (and then some).

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.

What Is a Bull Market?

Technically, a bull market is defined as a time when prices rise — generally by 20% or more. This trend then continues over time, with prices sustaining their highs or continuing to increase; this encourages more investors to join in and start buying.

Here are the main types: 1. Stock bull markets 2. Gold bull markets 3. Bond bull markets 4. Foreign exchange bull markets 5. Secular bull markets

Types of Bull Markets

As they say, what goes up must come down — and that downward movement is encapsulated in bear markets.

What Is a Bear Market?

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.

Understanding Bull Markets and Bear Markets

Bull and bear markets can refer to any kinds of investments, assets, or commodities — so, at any given moment, there may be a bull market for cryptocurrencies yet a bear market for stocks.

Swipe Up To Read More