Stock Market - Bull and Bear Market

All this talk about a bull and bear market makes it seem like it’s a zoo out there, well, yes, especially when it comes to investing. And, like any zoo, there are quite a few species found on Wall Street.

What Is a Bull Market?

Bulls are people who believe that all is right with the world and the stock market is on the rise. Bull markets are very profitable times. There are plenty of jobs on Wall Street and investors are flush with cash that they eagerly use to buy more stocks. People are optimistic about the direction of the country and everyone appears to be in the stock buying mood. In the early 1920s, the bull market was fueled by the increased use of automobiles and electricity, and in the 1990s, the Internet and computers drove up stock prices

What Is a Bear Market?

Bears are people who believe the economy is heading for a downturn, and the market will either stagnate or go down. Sometimes the market goes through periods of months or even years when it’s on a steady decline. Official bear markets are when the major market indexes, like Dow, NASDAQ, and S&P 500, are declining. Bear markets can be pretty depressing times on Wall Street. People will sell their stock for whatever price they can get for them. Some would rather put their money in cash, gold, or bonds, than invest in the stock market. The major brokerages on Wall Street stop hiring or lay off employees. Because the stock market often predicts what will happen to the economy, a lengthy bear market may signal a future recession. In the past, bear markets have been relatively short, but no one can predict how long they can last.