If you follow the stock market, you have probably heard many references to bulls and bears. but what do these animals have to do with investment? Let’s take a look at what people mean when they say someone is bullish or bearish.
what does it mean to be optimistic?
When someone is bullish, it means they expect prices to rise over a certain period of time. The term is applied to broad market indices like the S&P 500, specific industries, entire asset classes like real estate or commodities, and even individual stocks. It might help to think of a charging bull raising its horns to remind yourself that to be bullish is to expect prices to go higher.
A bull market does not have a specific definition, but it is a sustained period in which prices rise and are generally expected to continue to do so. A bull market is generally thought to have occurred when prices are up 20 percent or more from a recent low. a bull market can last for years like it did for stocks from the lows of the financial crisis in 2009 to the global pandemic in March 2020.
what does it mean to be a bassist?
On the other hand, being bearish means expecting prices to decline over a period of time. This term also applies to any financial asset and could be used to describe an outlook for an individual stock such as Tesla or stocks in general. To help remember that bearish means falling prices, think of a bear clawing at its prey.
A bear market is essentially the opposite of a bull market, meaning it is a prolonged period of falling prices. A bear market generally occurs when prices are down at least 20 percent from a recent high. Historically, bear markets have not lasted as long as bull markets in the stock market. the United States. The stock market entered a bear market in March 2020 when prices fell more than 30 percent in a matter of weeks. but the recovery was almost as quick, with a new bull market starting later that year.
how to invest during rising or falling markets
If you could anticipate when bull markets would start and end, you could adjust your investments accordingly to take advantage of changing conditions. The reality is that once bull and bear markets become clear to investors, it’s probably too late to take advantage of the change.
In the case of stocks, it is important to remember that they are part of your long-term investment plan and you will experience both types of markets during your lifetime as an investor. Stocks tend to go up more than they go down over time, so you are likely to see more bull markets than bear markets. consider holding low-cost index funds for the long term and know that ups and downs are to be expected.
An approach that can help you take advantage of the ebbs and flows of the market is known as dollar cost averaging. By making consistent contributions and investments over time, you can buy more shares when prices are lower and fewer shares when prices are higher. these contributions could be part of a workplace retirement plan like a 401(k) or your own traditional or roth ira account.
Bulls think prices are going up, while bears think prices are going down. try not to get caught up trying to anticipate when a bull or bear market might start or end. Think of your investments as part of your overall financial plan, and do your best to take a long-term view.
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Editorial Disclaimer: All investors are advised to conduct their own independent research on investment strategies before making an investment decision. furthermore, investors are cautioned that past performance of the investment product is not a guarantee of future price appreciation.