Very often we have come across these phrases as- “bullish market” and “bearish market”, ever wondered what the logic behind these is!! When we refer to markets as a bull market or a bear market, we are actually referring to the market trends in the long run. This is not just restricted to stock markets, but any such other market trading in securities as bonds, currencies and commodities.
When the market is said to be bullish- we mean that the market is experiencing an upward trend. That is the prices of the securities is rising or is expected to rise over a long period of time. Whereas, when a market is said to be bearish- we mean that the market is experiencing a downward trend, the prices of the securities are lowering or are expected to lower further in the long run!
Bullish markets are often characterized with optimism, confidence among the investors and a positive vibe is spread all across the market, while exactly the opposite holds for a bearish market- characterized with pessimism about the market, low confidence among the investors and a sort of depression in the market. Bullish markets are experienced during period of inflation or growth, whereas bearish markets are basically observed during periods of recession.
Well, over here we still have one question unanswered! The question is that as to why are the markets referred to as being BULLish or BEARish? The answer is that markets are described as being a ‘bull’ or a ‘bear’ from the way they attack their rivals. A bull attacks by thrusting its horns up into the air while a bear swipes its paws down. These actions are metaphors for the movement of a market. When an upward trend, it’s a bull market; and when a downward trend, it’s a bear market.
At the time of investing, the basic idea to be kept in mind is to buy low and sell high in order to generate greater profits, this means, buy during a bear market and sell during a bull market!