What is a Bear Market & What is a Bull Market?
What is a Bear Market & What is a Bull Market?
A bear market occurs when the prices of investments in the stock market are in a continual decline and investor confidence is extremely low. Investors often sell off a lot of their investments during bear markets at prices lower than they purchased them for, violating the #1 Rule in Investing: “Buy low, and sell high.” Although figures vary, a downturn of 20% or more over a 2-month period is often considered entry into a bear market.
A bull market occurs when the prices of investments in the stock market are rising and are expected to continue to rise for an extended period of time. These time periods are often characterized by over-confidence and the feeling that “it’s different this time”. Recall, for example, when in 1998/1999 it was widely thought that any “dot com” would be a profitable company because the web had “changed everything”. Yes, the Internet changed a lot of things about the experience of our everyday lives, but even dot com companies are still subject to potential losses.
