I’ve heard people talk about bull markets and bear markets. But what does it even mean?
A bull market is when the stock prices keep going up for a long time, and a bear market is when the stock prices keep going down for a long time.
Even though the terms bull and bear market are different, it is hard to remember which is which. Is there an easy way to remember that?
When bulls charge, they start with their horns low and move them up. But when bears charge, they start on their back legs, rearing up, and then they come down. That’s how the terms bull market and bear market were coined.
What causes a bull or bear market?
Like any stock price change, the basic reason is the underlying economic factors like inflation rate, prevailing interest rates, unemployment rate, etc. It is also affected by the market sentiment, which is people’s expectations of the future performance of the companies in the stock market.
Can you teach me how to predict if there is going to be a bull or bear market? I would love to get super rich quickly!
If only we could predict! Experts try to forecast if the stock prices are going to go up or down, but how long a bull or bear market would last cannot be predicted with certainty.
Do they always take turns? I mean, is a bull market always followed by a bear market, and vice versa?
Yes, usually they do follow each other. But at times, there could be periods of stock prices being stagnant.
What should be my investment strategy in bull and bear markets? Should I buy more during a bull market because the market is going up, and sell more during a bear market because the market is going down?
During a bull market, people assume that the stock prices would keep going up, and they want to buy more stocks. But a bull market is actually a good time to sell at least some of your stocks to book profits. Likewise, during a bear market, people are scared and assume that the stock prices would keep going down, and they want to sell all their stocks. But a bear market can be a great time to buy stocks of good companies at a low price, so that you can book profits when the prices go up again.
However, if you are disciplined and follow good investing practices like Dollar Cost Averaging, then it doesn’t really matter whether it is a bull or bear market.
What is Dollar Cost Averaging?
Dollar Cost Averaging is a great strategy for long-term investors. But that’s a topic for another time…
Podcast: What is a Bull Market and a Bear Market
Fun, informative and concise episodes by a 10-year old, breaking down complex financial concepts in a way that kids and beginners can understand. Episodes cover personal finance topics like saving, investing, banking, credit cards, insurance, real estate, mortgage, retirement planning, 401k, stocks, bonds, income tax, and more, and are in the form of a conversation between a cowboy (a finance novice) and his friend, a stock broker. Making finance your friend, only at Easy Peasy Finance.
A little bit about me: I have been fascinated with the world of personal finance since I was 6! I love to read personal finance books, and keep myself updated on the latest by reading various personal finance magazines. My friends often ask me questions about finance because they find it complex and intimidating. That’s what inspired me to start my YouTube channel called Easy Peasy Finance when I was 8, and this podcast 2 years later.
Everything you need to know about bull and bear stock market: What is a bull market and a bear market, is there an easy way to remember what is a bull market and a bear market, how were the names bull market and a bear market coined, what causes a bull or bear market, can you predict if there is going to be a bull or bear market, is a bull market always followed by a bear market and vice versa, what should be your investment strategy bull markets and bear markets, should you buy more during a bull market because the market is going up and sell more during a bear market because the market is going down, and more.
Show notes and transcript at: https://www.easypeasyfinance.com/what-is-a-bull-market-and-a-bear-market/