Bullish and Bearish: Rising and Falling Market Price Trends
Where do the ‘bull’ and ‘bear’ come from?
Etymologists referred to a not-wise proverb warning “sell the bear’s skin before one has caught a bear.” Back in the eighteenth century, the term bearskin was used in the phrase “to sell or (acquire) the bearskin” It was then shortened to “bear,” which applied in the stock market since selling and buying was done by speculators. Also, The word “bears,” short for bearskin jobbers, refers to these middlemen and describes a market decline. Contrarily, the name bull is being used to denote the opposite of bears since, historically, due to the once-common blood sport of bull-and-bear fights, bears and bulls were popularly regarded as opposites.
Many people in the eighteenth-century scandal used this selling in England, known as the South Sea Bubble.
In investing, “Bull” and “bear” are typically used to refer to the market’s increasing and decreasing price trends.
These phrases explain the general state of the stock markets, including whether their value is dropping or rising. Additionally, as an investor, the market’s direction is an influential factor that significantly affects your portfolio. Therefore, determining how these market circumstances may affect your investments is crucial.
What exactly is a bull market?
A bull market, usually called a bull run, is an extended period when stock prices rise. No one stat or indicator indicates when we are in a bull market, but one general guideline is when stock prices have increased by at least 20% from their most recent low and show signs of continuing to grow.
Investors frequently believe that an uptrend will last for the long term during such circumstances. In this case, the nation’s economy is typically robust, with high employment rates.
What about a bearish market?
On the contrary, a bear market is continuously declining. Despite this, a market is considered a real bear market when it has fallen at least 20% or more from recent action. As a result, investors predict a downward trend will continue, which feeds the low cycle. In a bear market, businesses start laying off employees, which slows down the economy and increases unemployment.
Securities’ Demand and Supply
There is a great demand for securities and a small supply in a bull market. To put it another way, many investors want to acquire assets, but only a few are ready to sell them. So as investors fight for available stock, share prices will increase as a result.
The converse is true in a bear market: more people are looking to sell than to buy. Because there is a far greater supply than demand, share prices decline.
Conclusively, Working with a financial advisor is one approach to managing your investment portfolio, regardless of whether your belief falls bullish or bearish.
The stock market, as a whole, has tended to record positive returns over long time horizons, despite the possibility of confident investors being “bearish.”
A bear market can make investing riskier since many stocks lose value and prices become erratic.
Investors may remove their funds from a bear market and hold onto them until the trend reverses, further driving prices down because it is difficult to predict when a market will bottom.