Bullish and Bearish Market- All You Need to Know
When you listen to people exclaiming on bullish and bearish stock markets, you guess it is some jargon? Not at all. These are simple concepts. Ideally, when you are planning to invest in shares, you need to know these very well. Read on to know these in detail:
A bull takes on its enemy by pushing them in an upward direction. A bullish market similarly takes the stock prices soaring towards sky level.
Reasons for a bullish market:
- When the overall consumption increases demand goods and services.
- When companies in an economy declare good profits.
- When the price earnings ratio increases the market tends to be bullish. When the stock prices increase in proportion to the growth of earnings of a company the market tends to be bullish.
Advantages of a bullish market:
- When the market is bullish, the investors can earn huge profits by selling at high prices.
- When the stock market tends to be bullish, it improves the overall indicators of the economy and various indices in an upward direction. This brings positive growth.
But when prices keep increasing, an investor doubts whether is it a safe option to stay with shares or switch on to other modes like crypto using bitcoin trader.
A Bear knocks down its enemy by pulling them down. Likewise, a bearish market moves the stock prices down.
Reasons for a bearish market:
- When the consumption demand comes down the market is loaded with a surplus of unsold goods. Hence prices come down bringing the stock rates down.
- When the economy is in poor shape, companies tend to perform badly. Poor financial results of companies bring the market down.
- When there is too much of statutory regulation, the stock prices come down
Advantages of a bearish market:
One might think what advantages there will be when stock prices tumble down. Basically one has to understand that the bearish market is a passing phase. Hence investors need not fear. The advantage of a bearish market is that it will bring down prices of all the shares down. Hence even shares of excellently performing companies come down. It is the right time to buy more shares. You can buy at cheap prices and earn more profit while selling these when the market condition improves.
Depending on the external factors of economy, the bullish and bearish trend operate in turns in the market. Anyone trend will not stay forever. Even if the trend prolongs, it keeps changing.