Shinsei Associates explains the terms ‘Bull Market’ and ‘Bear Market’.
Shinsei Associates has helped many of our clients to expand their knowledge of the financial markets. Two of the most basic terms used to describe the condition of the stock market are a ‘bull market’ or a ‘bear market’. A bull market describes a consistent upward movement of the stock market over a period of time, whereas a bear market is a constant downward movement of the market. These terms are not used to describe short term fluctuations within the market, but rather a definite trend over a period of time.
These terms can also be applied to particular stocks. If a stock has been on an upward trend then it is said to be a bullish stock. Conversely a stock on a downward trend can be said to be bearish.
Shinsei Associates sees the stock market as a barometer for a countries economic state. Bear markets tend to occur during economic downturns whereas bull market will generally be a sign of a growing economy with good economic indicators such as interest rates and unemployment figures.
Conventional wisdom holds that it is easier to make a profit during a bull market, as all dips in price are temporary that will soon be corrected. However, holding to the old maxim that what goes up must come down, bull market will end and it is the goal of the investor to sell their stocks while the market is at its peak.
During bear markets Shinsei Associates sees a greater interest in bonds and stocks of utilities and non-durable producing companies to be more in demand. After all, you are still going to need electricity and toothpaste, no matter the state of the economy.