Bull market vs Bear market: Everything you need to know

The market is said to be a bulls market when a rise of 20% in the whole sole performance of the stock market is observed. On the contrary, bears market is when the overall downfall of 20% in the performance, is noticed. In simple terms, when the market trend is rising, it’s bull market, whereas if there Bull and Bear Market: Definition & Difference is a fall, its a bear market. Most of the time, investors lose their confidence and exit in the bear market itself by booking losses. But there is a caveat involved; selecting a stock based only on its price during a bear phase, without checking the fundamentals of the company, can be misleading.

And as an investor, the direction of the market is a major force that has a huge impact on your portfolio. So, it’s important to understand how each of these market conditions may impact your investments. There have been 26 bear markets in the S&P 500 Index since 1928. However, there have also been 27 bull markets—and stocks have risen significantly over the long term. But to temper your expectations and grow your money in the long run, it’s important to know exactly what bear and bull markets signify, and how that might play into your investment strategy.

The longest bull markets in history

Chances are, as the history of the stock market has proved, the economy will recover and your holdings will begin to appreciate again. Half of the S&P 500 Index’s strongest days in the last 20 years occurred during a bear market. One of the best ways to determine whether a bear market is pending is to watch interest rates.

If the Federal Reserve lowers interest rates in response to a slowing economy, it’s a good clue that a bear market could be on the way. But sometimes a bear market begins even before interest rates are lowered. Think about the things consumers will need no matter what – those are the sectors that tend to perform well during market downturns.

Bull Market vs. Bear Market Comparative Table

Previously, she wrote two books on identity theft and several young adult nonfiction titles. Her work has been featured in The New York Times, The Washington Post, MSN, Yahoo Finance, MarketWatch and others. In the last decade, there have been two occasions where the long-term moving average was violated but did not lead to a longer-term change in the trend. As investors, it is important to understand what a “bull” or “bear” market actually is. 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. CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount.

She has previously worked at CNBC-TV18, Thomson Reuters, The Economic Times and Entrepreneur. To remember which is which, remember that bulls are known for being aggressive and charging ahead, , while bears are known for hibernating . FMCGFast-moving consumer goods are non-durable consumer goods that sell like hotcakes as they usually come with a low price and https://www.bigshotrading.info/ high usability. Their examples include toothpaste, ready-to-make food, soap, cookie, notebook, chocolate, etc. Investors’ confidence heads towards pessimism and can create a situation of panic. Market indices and many securities reach new trading lows, and dividend yields also become very high. It indicates more money is required to be pumped into the system.

Bear vs. bull markets: How they differ and can affect how you invest

But what exactly do they mean, why are they called this, and how should you act in each of these market phases? This is because the value appreciated due to the rupee cost averaging feature over the long term.

On the other hand, if the market moves downwards, it is referred to as a ‘Bear Market.’ The terminologies apply to how each of these animals attacks their opponents. The bull will thrust its horns in the air in respective scenarios, whereas a bear will stamp its paws down on its prey. Before you start investing, you should consider what your investment strategy will be. There are plenty of strategies to choose from, and dollar cost averaging is but one example of a strategy that looks to minimise risk.