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  • An index of greater than 1.0 indicates a future rise in market indices and vice-versa if it is below 1.0.
  • I am going to explain you the concept in detail with the difference between both the markets.
  • As an investor, you will experience both bull and bear markets that impact your investments.

On the other hand, the investor’s view of future is pessimistic, in the bears market. Those investors who expect the prices to fall are called bears, and the sentiment is known as bearish. Those investors who expect the prices to rise are called bulls, and the sentiment is known as bullish. The market is mentioned as bulls when the overall market scenario is positive and the market performance is on the rise. A bearish market is when the performance of the market is on the decline. It provides a platform for sellers and buyers to interact and trade at a price determined by market forces.

Stock Market Terms Every Good Trader & Investor Knows

While bear markets have become less frequent overall since World War II, they still happen about once every 5.4 years. During your lifetime, you can expect to live through approximately 14 bear markets. It is tempting to try and buy early and sell when investments have reached their peak but it’s not always that simple to do. Though it is still important to keep an eye on the broader goings on of the market. Learning market trends requires evaluating performance over a period of time. Both the terms come from the behavior of two animals when they attack.


Bull markets are preceded by Investor confidence, positive expectations, and general optimism in the market. This might seem counter-intuitive, but buying when people are panic selling and selling when people are rushing to buy is your key to success. Do you know any sort of trading among different financial instruments takes place in the Secondary Market? All services are provided on an execution-only basis and no communication should be construed as a recommendation or opinion to buy, hold or sell any of the financial products issued by Axi. Investing is NOT about beating some random benchmark index which requires taking on an excessive amount of capital risk to achieve. Rather, our goal should be to grow our hard-earned savings at a rate sufficient to protect the purchasing power of those savings in the future as “safely” as possible.

Bull vs Bear Market – When Should You Invest??

However, in a bearish market, international investments may not be a favorable option for other countries, and such a move could be postponed to a futuristic date. To forecast market trends and various ratios and formulas that explain current gains and losses in stocks and indexes and their expected movement in the future. The market breadth index is an indicator measuring the increasing number of stocks versus those falling. An index of greater than 1.0 indicates a future rise in market indices and vice-versa if it is below 1.0. In either of the scenarios, the causes are interdependent, and the cascading effect for the same is observed. While bull markets generally don’t cause people too much stress, bear markets often inspire anxiety and uncertainty.

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Not just the retail investors but institutional investors also start to pull out funds from the share market, leading to a drop in the share prices. When trade prices fall about 20 percent from their recent highs, the market is said to be bearish. It represents pessimism and an overall dipping of investor confidence in the market. Like a bull, the term is believed to be coined by how a bear hits its claws in the downward direction — a metaphor for the decreasing stock prices. A bear market occurs when prices are falling, or when they’re expected to decrease.

A “correction” is defined as a decline of more than 10% in the market. Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. When the stock goes up again, is great because that’s when we start to collect the profit. Rule #1 Investing is about taking advantage of fear and greed.

Do not infer or assume that any securities, sectors or markets described in this article were or will be profitable. Historical or hypothetical performance results are presented for illustrative purposes only. Whether we know it or not, the stock market and how it’s doing at any given time is a reflection of how investors feel about and react to changes that occur in the market and the economy. Investors’ sentiment is a powerful tool and is directly related to stock market performance.

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So, it’s important to how each of these market conditions may impact your investments. As against this, in the bears market, the response of investors is negative because due to the continuous fall, investors are afraid of investing money in the stock market. Whether the market is going through a Bullish or a Bearish market scenario is not in the hands of an individual or a single factor but large scale factors and other macroeconomic situations. Every investor has to go through such phases since these situations are inseparable.

Predicting markets for investment purposes is a tough call for anyone, including market veterans. So, to make the most of both phases, investors can invest gradually in a calibrated way that does not lead them to suffer steep losses. In a bear market, however, the chance of losses is greater because prices are continually losing value and the end is often not in sight.

Investor Psychology

You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. Investing involves risk, including possible loss of principal. The information provided is for illustrative purposes only and is not meant to represent the performance of any particular investment. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Bear markets are closely linked with economic recessions and depressions.

Bearish trends typically last longer than bull markets which have shorter duration periods, with the amount of bearish traders overwhelming the amount of bullish traders . Growth stocks in bull markets tend to perform well, while value stocks are usually better buys in bear markets. Value stocks are generally less popular in bull markets based on the perception that, when the economy is growing, “undervalued” stocks must be cheap for a reason. According to the formal definition, a bull market takes effect when stock prices have broadly increased by at least 20% since the last market downturn. Bull market conditions can last for decades, and many successful investors have bet very wrongly by trying to predict the end of a bull market. Will automatically get encouraged in a bullish market to expand the existing portfolio.

When handling a bull market, it’s important to remember that prices can rise quickly and unexpectedly. As such, it’s important to be prepared for a sudden change in direction. Additionally, it’s important to be careful when making investment decisions, as prices may not always continue to rise. The economic world has changed radically and will change even more. Most people think now that the essential nature of the stock market has been undergoing a corresponding change.

More importantly, it provided a deep insight into how the stock market functions — something which was hardly been experimented on a show before. One of the terms that were frequently used in the show was “bulls” and “bears” in the market. Harshad called himself the “Big Bull” of the stock market, while his nemesis — the Cobra gang, was the “bears” of the market. The best way to handle both types of markets is to be prepared for both. Having a diversified portfolio and being able to take advantage of both rising and falling prices is the best way to profit in both types of markets. Finally, don’t forget to stay disciplined with your investment strategy.

Stash through the “Diversification Analysis” feature does not rebalance portfolios or otherwise manage the Personal Portfolio Account for clients on a discretionary basis. Recommendations through this tool are considered personalized investment advice. Investing a fixed amount each month can be a smart move in bull-ish times. If you are considering selling your house, you may find that partnering with a home buyer makes the process more streamlined and expedited. They are going to handle everything that has to be done in order for the transaction to be finalized, including the paperwork and the inspections. Visit

Conversely, a bear market happens when asset prices decrease over a sustained period of time. In the case of equity markets, a bull market denotes a rise in the prices of companies’ shares. In such times, investors often have faith that the uptrend will continue over the long term.

What’s the Difference Between a Bull & Bear Market?

In contrast to the bull market, the SEC defines a bear market as a time when stock prices are declining and market sentiment is pessimistic. Generally, a bear market occurs when a broad market index falls by 20% or more over at least a two-month period. In a bull market, prices are expected to rise as demand for assets increases. This is typically seen as a positive market, as investors can buy assets at lower prices and then sell them at a higher price later on.

However, in the long when a series of upward or downward movement occurs in succession, a trend can be seen, and this is denoted as a bear market or bull market. A bull market is a financial market in which prices are rising or are expected to rise. An investor may also turn to defensive stocks, whose performance is only minimally impacted by changing trends in the market.

How To Remember a Bear vs. Bull Market

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