There are only two ways that generally happen in a stock market – being in a bull market or in a bear market. This is the classic economic tug of war that makes for interesting times and conditions in stock markets anywhere else in the world.
A bear market, as everyone knows, is that general and continuous downward movement of the stock market. On the other end, a bull market indicates the constant upward movement of the stock market.
When a particular stock seems to increase in value, it is described as bullish. A stock that seems to decrease its value is describes as bearish.
Bear and bull indicators
Short term market fluctuations, however, are not indicative of bull or bear markets. A bear market is when the price of key stocks fell by 20% or more for at least two months.
Prices, of course, sometimes temporarily increase within a bear market. Bull markets, on the other hand, indicate a rise in the prices of key stocks over a certain period of time.
Economic indicators
Usually, the state of the country’s economy is reflected in the conditions within the stock market. With an economy with reasonable rates and low unemployment, the condition is regarded bullish.
During a country’s economic slowdown, bear markets occur in the stock market. Investors lose their confidence and companies start laying off its workers.
An exaggerated bear market usually leads to an economic crash brought on by panic selling. An exaggerated bull market usually leads to a market bubble brought about by investor over-enthusiasm.
Bull markets
As expected, a bullish market generates a big number of investors who want to buy stocks. At times like this, the economy is usually doing very well.
It is not surprising that many people would want to buy stocks because they have the extra money. This, however, triggers an increase in stock prices because there will be a shortage in the supply and the demand for them is great.
Making money during bull markets is easier. All dips are temporary, and are corrected in time. Because the upward swing of prices cannot go on forever, the investors need to unload their stocks when the market reaches its peak.
Bear markets
During bear markets, a lot of investors typically unload their stocks and stash their money is fixed-run investments (like bonds). In these times, supply tends to exceed demand as money is withdrawn from the stock market.
On the bright side, bear markets are the most opportune times of picking up stocks at bargain prices. Usually, the greatest chance of making profits is at the end of a bear market. Since prices usually fall before they recover, investors prepare themselves for some short-term losses.
Strategies
During bear markets, investors usually resort to other investment strategies. One is short-selling. This involves the selling of stocks that investors do not own in the anticipation of further decreases in price.
This gives the investors a chance to buy the stocks for a lower price than their previous prices. Fixed-return investments are also used by investors to generate income.
Finally, they buy defensive stocks (including government-owned utilities) because of their relative safety to price downward roll in bear times at the stock market.
You are at the point of your life when you badly want to put your money on proper venues. This is why you have been asking around for opinions and financial advices. You are doing the right thing because you will never go wrong as long as you feel safe and protected that you have made the right choice. This is why many people like you are choosing to invest on the stock market. They feel secured and protected with this kind of venture. This is because there are regulators that are responsible in protecting those who have invested in such.
Before you fully commit in investing with stocks, you have to be sure that you are ready for such venture. This means that you have planned things out and you are very much capable of handling the tasks as well as keeping up to date with how the markets are faring so that you will understand where your money is going. It will help if you will first research about the venture and all its aspect so that you will understand most things before you plunge into it. As you do your research, you must also start scouting for a good broker. They can guide you with how far should you go regarding your investments. They can teach you the basics, especially in the beginning when you are still trying to comprehend all things little by little.
Safe and Protected
You have been hearing a lot of good things about this kind of investment, but how can you be so sure that these are real? For one, there are regulators on this venture that aim to help you against con games as well as swindling brokers. The securities industry is actually one of the most highly regulated industries in the US. The US Congress made sure that major laws are passed to help the industry’s operation. This agency is also responsible in authorizing the budgets for the Securities and Exchange Commission and other bureaus that have regulatory responsibilities.
To oversee the securities industry, the SEC makes sure that transactions are in order. They register new securities and manage the filings that are required for public companies like annual reports and quarterly reports. The SEC also looks at the stock exchanges as well as other firms and organizations that sell securities. They have effective means to find out fraud and scams on the marketing and advertising of various organizations who are luring people to try such venture. The SEC imposes on all companies to abide by their strict rules when it comes to the sale of securities.
Aside from SEC, the FINRA or Financial Industry Regulatory Authority, an industry self-regulatory body, oversees other matters of the securities industry. They set the standards for stockbrokers and other related professionals in the venture. They give out licenses after giving those who are interested broad and inclusive examinations.
Times are hard and it is not that easy to earn money. This is why you really have to make sure that you are going to invest what you have earned on safe ventures where you will profit in the long run. You can get all these as you look deeper and understand the complexities of the stock market.
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