The proverb ‘Take the bull by the horns’ is appropriate for the description of a continual period in the financial sphere when prices rise. So, we are talking about a bull market today.
The term ‘a bull market’ is usually used regarding the stock market. Nevertheless, it can be found in the spheres of corporates stocks, real estates, goods and so on. What exactly does this word stand for? It stands for a rising market. In connection to this, bulls are investors who expect prices to rise. They will have a wonderful chance of reselling it for a profit afterwards.
One of the most striking features of this phenomenon is that a bull market, as a rule, occurs during the time when economy is both strong and powerful. Investors in general tend to believe that they will get a profit, so investor confidence rises. As soon as it happens, there will be a great universal demand for stocks. Perhaps there should also be pointed out that the longest bull market took place during 2009 and 2020.
One shouldn’t, however, forget that there is actually a competitor of a bull market. It is called a bear market. A bear market (or a declining market) makes investors feel pessimist, unfortunately. Consequently, there are significant falling prices during a short period of time. It is often said that such a market got this name due to the following idiom: ‘selling the bearskin before one has caught the bear’.
Well, it would be unfair not to mention the main differences between a bull and a bear markets. Firstly, a bull market usually rises 20 per cent from current bear market lows and reaches record benchmark highs. A bear market, however, means any stock index or individual stock that falls 20 per cent from its current highs. Secondly, investors in a bull market hope that prices will rise in the future. Otherwise, investors in a bear market are going to sell their investments during such periods so as to get rid of losing more money. Thirdly, earnings growth in a bull market tends to strengthen while earnings growth in a bear market tends to weaken; economic strength of a bull market is characterized as growing and a bear market one is characterized as declining.
In conclusion, we can say that although market rounds include both a bull and a bear markets, it is advisable to make a plan of attack in order to strengthen your confidence in these two markets. We can achieve this with the help of making up an investment plan, long-term investments and diversification of our assets.