Bull market vs Bear market: Everything you need to know

A bull market occurs when the economy is strong and getting stronger. The economy benefits from higher consumer spending and increased business investments. The more people spend on goods and services, the more money those businesses have to grow their business, create more jobs (which creates more consumer spending), and invest in new technologies. The stock market can be bearish even while bull markets are occurring in other asset classes and vice versa. If the stock market is bullish and you’re concerned about price inflation, then allocating a portion of your portfolio to gold or real estate may be a smart choice. If the stock market is bearish, then you can consider increasing your portfolio’s allocation to bonds or even converting a portion of your portfolio into cash.

  1. The value of shares and ETFs bought through a share dealing account can fall as well as rise, which could mean getting back less than you originally put in.
  2. Remember that your decision to trade or invest should depend on your risk tolerance, expertise in the market, portfolio size and goals.
  3. In this article, we’ll break down everything you need to know about bullish sentiment and bearish sentiment.
  4. Investors’ confidence starts climbing and the overall demand for stocks and similar assets go up.

In this article, we’ll break down everything you need to know about bullish sentiment and bearish sentiment. They are both market types that are very common in the financial markets during an economic cycle. A bull market happens when the prices of financial assets increase over a sustained period of time. Conversely, a bear market happens when asset prices decrease over a sustained period of time. A few extreme examples of bear markets are the Great Recession around the 2008 financial crisis and the Great Depression, which roughly began with the stock market crash of 1929.

Understanding them can help you make smarter decisions instead of reacting out of fear. A bull market occurs when a major stock market index rises at least 20% from its recent low. Despite the 2022 lows in which inflation skyrocketed and interest rates dramatically increased, 2023 could be promising. The S&P 500 has jumped nearly 14% since October 2022 and is only 6% away from transitioning into a bull market. Bull markets often indicate a general “up” period in the economy, especially if the business cycle is in the expansion or “normal” phase.

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The prices of shares rose so much and so often that this period turned into one of the longest bull markets we’ve ever seen. Well, spotting a bull market can help you better understand an investment’s current behaviour. Knowing this information helps to ensure you’re making decisions that fit your long-term game plan.

Bear Market Survival Tips

GDP increases when companies’ revenues are increasing and employee pay is rising, which enables increased consumer spending. GDP decreases when companies’ sales are sluggish and wages are stagnant or declining. Let’s take a closer look at some typical hallmarks or signs of bull markets vs bear markets, and what investing strategies tend to be better suited for each one.

This article has been prepared for information purposes only by Charles Archer. It does not constitute advice, and no party accepts any liability for either accuracy or for investing decisions made using the information provided. AxiTrader Limited is a member of The Financial Commission, an international organization engaged in the resolution of disputes within the financial services industry in the Forex market. While that may sound simple enough and the only obvious thing to do, the reality may be different for many traders. Most people tend to use one tool (and not always the right one) for all jobs.

Are We in a Bull or Bear Market As of 2023?

It is observed that bull phases last longer than bear phases, over a long-term trend. Over 22 years, there have been five instances of bullish trend as compared to three instances of bearish trends. More specifically, however, a bear market describes any stock index or individual stock that drops 20% or more from its recent highs. A bull market, on the other hand, typically rises 20% from recent bear market lows and reaches record benchmark highs.

As for which investing strategies to employ, different sectors tend to outperform over various periods in a bull market. Early on, cyclical sectors like financial stocks and industrial stocks tend to outperform as they are most sensitive to interest rates and economic growth. Bull markets are those that show consistently rising stock prices on average over a period of time, usually at least six months. The longest bull market occurred just after the Great Recession, starting in 2009 and running through 2020. Both bear and bull markets will have a large influence on your investments, so it’s a good idea to take some time to determine what the market is doing when making an investment decision. Remember that over the long term, the stock market has always posted a positive return.

Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. One says a bull market is confirmed when a major index like the S&P 500 climbs 20 percent above its most recent low. By that standard, the bull market was confirmed in June, when the S&P 500 closed 20 percent above its October 2022 low.

Trend followers typically buy assets when they are rising in price and sell them when they are falling. In a rising price environment, a trend follower is a bull trader, and in a falling price environment they are a bear trader. In a bull market, stock picking is all about finding the right companies to invest in. Keep an eye on overall market trends identify the simplest model of sdlc so that you can identify which sectors and investing themes are popular and performing well. If you’re considering buying growth stocks in a bull market, it’s important to do your research and carefully select the stocks that you believe will perform well. And with each lesson, you get better at navigating through both bear and bull markets.

Investment advisory services are only provided to investors who become Stash Clients pursuant to a written Advisory Agreement. Whether it’s better to buy stocks in a bull vs. bear market isn’t a simple question; every market is unique, https://traderoom.info/ as are each individual’s circumstances. Investing in any kind of market comes with risk, including the risk that you could lose money, so it’s important to understand best practices for investing in both bull and bear market phases.

In other words, many investors wish to buy securities but few are willing to sell them. As a result, share prices will rise as investors compete to obtain available equity. In the stock market, the terms bulls and bears are commonly encountered which indicates, how the stock market is doing, at a particular time. A bullish market is when prices are going up and a bearish market is the opposite, where prices are falling. This difference can be seen over time in different types of trading charts, in which one line goes up while the other falls. Growth stocks are typically shares of companies that are growing at a faster rate than the overall market.

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