Bear market or Bull market?
What comes to your mind when you think of a bear? You might think about how they are dangerous or maybe even teddy bears pop up in your head. Bears can be very dangerous but are generally shy and scared of humans.
How about bulls? You might think of a bull riding competition. People ride bulls and are thrown around. This shows how ferocious bulls can be.
These two animals are often used to describe market trends. Market trends are upward or downward trends in a market, such as the stock market. They use these animals because they effectively describe these market trends.
In a bear market, things slow down. It seems like everyone is “shy and scared” in the market. They are afraid of losing money and almost expect it so the activity slows down. With less activity comes a drop in prices and it continues to cycle. This is when the market dips down.
The market is acting just like a bear. It can be dangerous because you lose money, and it is caused by “shy and scared” investors.
In a bull market, everyone is anticipating an up in the market. They see a potential for huge gains and decide to buy. They feel good and act ferocious, putting a lot of money into stocks. This in turn causes prices to pick up and an upward trend.
Sometimes it can be hard to remember which one is which. You might want to think about it as a “good” and “bad” market, but the animal analogies should help clear things up.
When the market is up it is moving strong, quickly, and ferociously just like a bull. When it is down, investors are less eager and frightened by the market just as bears are to humans.
Whether or not you remember the difference between the names is not important. The important thing is that you can spot a trend and act correctly. Always remember, buy low and sell high!
