Money Talk: The bulls and bears of the stock market
A look into what can be expected in a market that’s bullish or bearish
We have an inclination to use animals when describing or understanding situations – the stock market is no different.
For decades the environmental behavior of securities, or stocks, have been described as being bullish or bearish. The terms take into account the prices of the securities and the trajectory they are taking, as well as the traders’ sentiments.
Much like a bull in a china shop, you can expect there to be a lot of excitement and activity. Your assets are appreciating in value, traders are feeling positive about the market and everyone is trading at high levels, with more traders buying than selling.
During spring break, the stock market was extremely bullish, with stocks rallying for the entire week.
This was good news for many traders who had been taking losses for the entire first quarter of the new year. The continued purchase of securities drives up the price as the volume of the stocks available decreases.
This long string of losses was indicative of an extended bearish market.
Bearish markets can also become a vicious cycle. As traders come to anticipate losses in the market, they buy less and sell more, which continues to drive the price down as the market is oversaturated with securities.
The reason that the markets don’t do down a perpetual path of either bearish or bullish behavior is because market cycles create recessions and booms.
Usually the best time to buy securities is when the market is down, or bearish, but you want to catch it before the market begins to rebound upwards and securities begin to recover and make gains.
This practice would allow a sophisticated trader to maximize their gains.
Of course, bullish markets indicate high-levels of trade.
Fortune favors the bold and those willing to take the shot on reading the market tend to gain the most in a bearish market by the time the market turns to bullish.
Although, it’s important to note that the investing sophistication that comes with realizing significant gains in a market comes with education and experience – you have to put in the time to win big.
Kenneth Kashif Thomas is the senior arts editor and can be reached at email@example.com