Interested in the stock market? Want to know about the bullish vs bearish market? Well if yes, you are indeed on the right page. Bullish and Bearish are the stock market’s two most prominent words used in daily life.
The term bull and bear are used to explain the market conditions going on, on a regular basis. These two terms tell us about how stocks are doing on the market, whether they are appreciating or depreciating.
Any person who is from the commerce field or is a keen trader or light observer of the security market might have come across these two words - bullish vs bearish market.
Before investing your time and money in the stock market, one should be aware of all the terms related to the stock market. Bull and bear are two most important words used in the stock market.
Both of these market conditions have an impact on your investments in the stock market. Buying and selling of shares majorly depends on which kind of market situation is going on.
So, Let’s Start With a Brief Knowledge Regarding Both The Terms.
What Is a Bullish Market?
Bull market is a situation where the market is on the rise and the economy is known to be sound. The conditions of the market are generally known to be on the favorable side.
Bull market is a condition where prices are rising or are expected to rise. An investor should take advantage of rising prices by buying stocks early and then selling them when they have reached their maximum height.
What Is a Bearish Market?
Bear market is a situation where the economy is receding and stocks are declining in value. The market conditions are not known to be on the favorable side. During bearish markets, stock prices continue to drop.
Bearish market is a condition where prices intend to drop and for investors it is not known to be on the favorable side.
Bullish Market vs Bearish Market
Bullish Market :
When the market is bullish, the price of securities tends to increase continuously. During this scenario, investors believe that the rise in prices will keep increasing for a long period of time.
During a bullish market, the economy is known to be strong and the level of employment is also high. Demand for securities is strong while the supply is weak during the bull period.
At the time of the bull market, due to favorable periods, every investor tends to participate willingly in the interest of gaining profits. An investor should confidently invest in equity while expecting higher returns.
Losses tend to be minor or temporary during the bull market. So, investors can smartly plan their investments as they can expect high returns during a bull period.
Investors have high aspirations from their investments during the bull period and so the economy also goes well during this period.
Bearish Market :
When the market is bearish, prices of securities tend to decline. It is not favorable for investors to trade during bearish market.
Economy tends to get weak during bearish market as the economy cannot cope up with continuous fall in prices of shares. This disturbs the whole economy.
At the time of bear market, investors are least active in trading their securities as it is not known to be favorable for them.
Heavy losses can be incurred during bear market so investors should smartly make their move during this period as it can make a huge impact on their financial background.
There are no high expectations made regarding returns and the bear market also brings a lot of unemployment as the economy also slows down during this period.
Summary
Both bull market and bear market have a lot of impact on your financial investment. One should definitely have a thorough knowledge regarding both the markets. You should know the basic difference between bullish market vs bearish market. Before investing be prepared for all the circumstances.