Difference between Bull and Bear Market

Bull and Bear Market

In finance, the bull and bear usually describe the stock market condition whether the value is going upward or downward. And as an investor, it’s very important to understand the market conditions which will have a huge impact on your portfolio. 

Bull Market

It’s a certain period of time, can be months or years, in which the stock prices are consistently rising or expected to rise during that period of time. Not only is it applied to stock but any securities such as bonds, real estate, currencies and commodities. One of the best examples of a bull market is SENSEX when its price surged up by 98% during December 2011 to March 2015 in India Stock Market.

This market is one of the safest to invest on because you will see the favourable growth of stock value over time so, investors tend to buy stock in huge volume. A bull market is also described as a country which has optimistic growth of economic environments. During the time of bull, all the shares value of the company will rise and investors often have faith that uptrend will continue for the long term which determines the country economy and employment level.

There is three main key which helps the indications of bull markets are, gross domestic product (GDP) increment from the previous term, rise in stock prices, and increase of employment level across the country

Bear Market

This market is opposite to bull. The bear represents the decline of the stock price over time or expected to decline. SENSEX has also experience bear market from March 2015 to February 2016, dropped by more than 23%.

This market place is very dangerous and high risk to invest in since many equities lose their value and price become volatile and fragile, many investors tend to sell their stock in large number. It is considered as true Bear if the value has fallen 20% or more.

In a bear market, the share price is continuously dropping, which result in a downward trend, and lead to economy slow down and the rate of unemployment become high. Fall of GDP, share price fallen, and unemployment, these are the indications of a bear market