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What is the Difference Between a Bear Market and a Bull Market

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I am sure everyone is watching the stock market very closely. As you hear a lot of terms out there on what kind of market we are in, a lot of financial commentators are stating the bull market is over and now we are in a bear market. A lot of people have asked me, what exactly does that mean? Below is a high level overview of the differences between a bull and bear market. Please feel free to ask any questions in the comment section below.

A bull market is the condition of a financial market in which prices are rising or are expected to rise over a certain time period. The term "bull market" is most often used to refer to the stock market but can be applied to anything that is traded, such as bonds, real estate, etc. The term "bull market" is typically reserved for extended periods in which a large portion of security prices are rising over that time period. Bull markets tend to last for months or even years. Though there are a wide range of different factors that contribute to a bull market, the two biggest ones are a strong economy and high employment levels across the board. The most common definition of a bull market is a situation in which stock prices rise by 20%. Since bull markets are very difficult to predict, it is typically only recognized after it has happened. A notable bull market in recent history was the period between 2003 and 2007. Today we are officially moved to a “bear” market, with the Dow and S&P 500 having tumbled more than 20% below their all-time highs in February. That ended a record-long bull run that started in 2009 after the last recession.

A bear market is exactly the opposite of a bull market. It’s a market where quarter after quarter the market is moving down about 20 percent. That signals a bear market, and when that happens people start to get really scared about putting money into the stock market. For a fun fact, the reason it is called a bear market is because the way this particular animal, the bear, attacks its victims. A bear swipes downward during the attack. Bear markets are caused by individual events, such as a pandemic virus, or general slow downs in the economy. Bear markets last a variety of lengths. Some can last for just several weeks, while some bear markets can last for years. Most experts agree we have entered a bear market, but unsure how long it will be. A lot of smart people buy during the bear markets, but timing is everything. Make sure you speak with a financial advisor before investing.

 

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Comments 1

Wanderer on Sunday, 22 March 2020 03:04

Good points to raise our awareness. Remembering back to 2008 when the Dow was around 8500. We are heading that direction. A shake out of some form usually comes every few years (3 to 4 years) and market adjustments happen. This is the longest Bull Market run I can remember. After the shake out ends full employment, easy money and such will be but a memory. In the end it is all the people that get layed off, the companies that decide to hang it up and so on that cause us to adjust our life. Retail has been on life support for awhile and Eateries. Now the airlines as Delta is retiring about 600 airplanes out of 1340 or so and they are offering employees buy outs to permanently reduce their labor force (they are quote that they will come out of this Cor Virus a much smaller leaner airline). Seems others have now announced similar actions. Our world is on a fast track change. Now I know why I dislike change. Oh, should add that it is said that the number of colleges will be reduced to closures due to costs and actual lack of students (demographics).

Good points to raise our awareness. Remembering back to 2008 when the Dow was around 8500. We are heading that direction. A shake out of some form usually comes every few years (3 to 4 years) and market adjustments happen. This is the longest Bull Market run I can remember. After the shake out ends full employment, easy money and such will be but a memory. In the end it is all the people that get layed off, the companies that decide to hang it up and so on that cause us to adjust our life. Retail has been on life support for awhile and Eateries. Now the airlines as Delta is retiring about 600 airplanes out of 1340 or so and they are offering employees buy outs to permanently reduce their labor force (they are quote that they will come out of this Cor Virus a much smaller leaner airline). Seems others have now announced similar actions. Our world is on a fast track change. Now I know why I dislike change. Oh, should add that it is said that the number of colleges will be reduced to closures due to costs and actual lack of students (demographics).
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Sunday, 09 August 2020

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