Understanding the Bull Market and the Bear Market

You may have heard the terms Bull Market and the Bear Market in the newspapers or on TV. What are they actually? Is it a market that trade bulls and bears or what?

Alrighty…

Markets have trends. These trends have their own nicknames. One trend is called a Bull. Another one is called a Bear.

When the market is generally trending upwards, we call it a Bull Market. When the market is trending down, we call it …. yup, you guessed it right, Bear Market.

Also, during a Bull Market, there will be corrections. This is when the market declines by about 10% to 20% in a short period of time before resuming the upward trend.

How to distinguish Bear Market and corrections? Well, if the market is declining by more than 20% over 12 months, and keeps on going down, then we have a Bear Market.

An opposite to the stock market correction is the Bear Market rally. This happens during the Bear Market when the market increases by 10% to 20% in short period of time, before resuming its decline.

So, there you go!

Oh another thing. Sometimes, the so called “financially-savvy” people might say, “I’m feeling bullish of Company A”. This basically means, they think company A’s share price is going up. If they say they’re feeling bearish, it means that they think the price is going down.

Alrighty then, till next time.

(Sorry for the repetiting “market” word)

About nadlique

This blog is about the journey of a 28-year-old Malaysian towards financial freedom. This blog was started back when the blogger was 21 years old. However, his journey towards financial freedom had begun way before that. Materials such as investing, business, entrepreneurship, equities, and real estate are presented. The author also posts his thoughts and observations on life in general.

Comments

  1. dont move against trend.

  2. i think, if you’re a long-term investor, then yes, you move with the trend. but at the present moment, i’m a short-term trader, so i like the short-term up and down waves.

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