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?
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)