When you start your investment journey, you definitely come across terms like “bull market” and “bear market”. In investment, the terms “bull” and “bear” are often used to describe the market conditions if they are increasing or decreasing in value. As an investor, it is important to learn investment banking to understand the market value as it may have major impacts on your investments.
What is a bull market?
A bull market is when the market is on the rise or expected to rise over a period of time. It also denotes high prices in the company's shares, which makes the investors gain more confidence in the market. When the market is “bullish”, it indicates that there is a rise in the GDP and there should be positive results for weeks and months to come. The typical indicators of a bullish market are increased prices in stocks, bonds, real estate, and more.
What is a bear market?
A bear market is the opposite of a bull market. A bear market is usually indicated by almost a 20% fall in the stock market prices throughout a minimum of two months. It creates a sense of negativity amongst the investors, and they hesitate to make any kind of investment. A bearish market leads investors to sell out their stocks so that they can minimize their losses.
A bear market can have an adverse impact on the GDP of the country and could cause a lot of unemployment. An average bear market can last for up to 1.4 years or even longer.
Bull vs Bear markets and their impact on investment strategies
Bull and bear market and your investment strategies are inter-related. Your strategy highly depends on the current market conditions. However, the market does not always have to be in either condition; it can remain stagnant for a long time and can increase or decrease very gradually.
It is generally advised to invest in both markets while keeping your portfolio in mind. During a bullish market, you should consider investing at a very early stage so that when the stock prices are at an all-time high, you can sell them and earn great profits. While in a bearish market, the prices usually drop and stocks tend to lose their value, therefore, you should check your investment profile and make adjustments in your strategy accordingly.
It is also advisable to buy large stocks of blue-chip companies during this time because that will ultimately get your profile back on track in the long run and help you recover your profits. Several capital market courses will guide you through the details of both markets and how you can create an investment strategy.
The bull and bear market can influence your investment strategies in a great way that is why it is wise to continuously keep a track of where the market is going from day 1 of your investment. You must have a risk tolerance when you start investing and should always stick to your strategies no matter how the market at the moment is.
Always remember that whatever the condition is, you can reap the benefits of the stock market in the long term. To understand further, you can look into the investment banking courses with placements and have an idea of how the market works.