The terms bull and bear markets are widely used in investing world. These terms indicate the behavior of financial markets. In simple words, the current condition of markets can be described by these two terms, which can further signal the investors’ sentiments and give direction to the markets. The appreciation and depreciation of financial instruments in value is important to be understood by comprehending these market conditions.
The broad definition of a bull market is a persistent period where prices rise. The term is used in reference to the stock markets, real estate, commodities, or foreign currencies. For the most part, a bull market in financial markets is when the stock prices on major market indexes, like Nasdaq 100, Dow Jones Industrial Average, S&P 500, or commodities like crude oil and gas rises from a recent low. Bull market refers to strong economy and low unemployment rates.
Bull markets give rise to bullish sentiments; investors show confidence and invest in securities. The term defines the market trend as bullish means the market is upbeat holding positive and buoyant sentiments of investors in specific financial instruments.
Supply And demand in Bullish Markets
Strong demand and weak supply embodies bull market. In consequence to this investors tend to buy financial instruments but few are eager to sell them.
The broad definition of a bear market is a persistent period where prices fall. The term is used in reference to the stock market, real estate, commodities, or foreign currencies. Particularly, a bear market in financial markets is when the stock prices on major market indexes, like Nasdaq 100, Dow Jones Industrial Average, S&P 500 fall from a recent high. Bear market is usually caused by slow economy and rising unemployment rates.
When the markets are bearish, investors tend to sell-off their investment to safeguard their money, and more likely move their investment in more conservative securities. The term defines the market trend as bearish means the market is edging lower holding pessimistic and gloomy sentiments of investors in specific financial instruments.
Supply And demand in Bearish Markets
In bearish market, the demand is low however the supply is surplus. More investors are interested in selling rather than to buy the securities.
Span of Bull and Bear Markets
When we compare bull and bear markets, bull markets can survive for a few months to several years, but they have the capacity to breathe longer than bear markets. Bull markets tend to be more frequent. In addition to that, the bull markets occurred 78% of the past 91 years.