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Difference between Bear market and Bull market
In the world of investment and share market, "bear market" and "bull market" are two important terms that are also seen as rivals of the financial world. Let's try to understand these terms and their difference in detail.
What is a Bull Market?
A bull market is a time period that might vary from several months to years when the stock prices are constantly rising. This term is generally used in the stock market where trading bonds, real estate, and currencies are common. An example of a bull market would be in the period of March 2019 to January 2020; in Cryptocurrency, the Sensex surged up to 98%.
When it comes to the financial world, a bull market describes the country's economic growth. Because of the thriving economy and unemployment, investors choose to hold on to securities, which indeed creates a market for buyers. No matter how many years the bull market runs, it’s a known fact that Bulls don't run forever.
What is a Bear Market?
A bear market is the exact opposite of a bull market. It is a period of several months to several years when the stock price declines or is accepted to decline. It is an economic trend where the economy is flowing downwards which leads to a drop in people’s confidence in the economy and most people prefer selling stocks during this period.
A bear market is also a good indicator of recession. The most famous and first bear market was called the “green depression”
Difference between Bull Market and Bear Market
The following table highlights the major differences between Bull Market and Bear Market −
Characteristics | Bull Market | Bear Market |
|---|---|---|
Market | Market is up | Market is down |
Sign | Sign of optimism | Sign of pessimism |
Trade | Buying stocks in large volume | Selling stocks in large
volume |
Economy | Takes place when the economy is
already strong or when its
strengthening | Takes place when the
economy is already weak
or weakening |
Impact on
country | GDP of the country will be raised | GDP of the country will
fall |
Employment | Low unemployment | High unemployment |
Confidence | Investors will generally have high
confidence on the market | Investors will generally
have low confidence on
the market |
IPO | The amount of IPO (initial public
offering) generally increases during
this period | The amount of IPO
generally tends to
decrease during this
period |
Interest | During this period investors are more
interested in buying the stocks and
investing in the stock market | During this period,
investors are more
interested in selling the
stocks and getting out of
the stock market |
Market rate | Markets raising 20% rise after two
20% falls | Markets falling 20% fall
from recent highs |
Interest rates | Low interest rates accompany bull
market | High interest rates
accompany bear market |
Investment | Growth stocks in bull market are
high | Value stocks in bear
market are high |
Conclusion
Whether it's a bull market or a bear market, your aim should always be to invest or buy stocks at the lower price and wait till the market rises. Once you see the rise in your stocks, you can make a profit from it. Even though many experts spend hours to weeks analyzing the market, there is no guarantee about the market. It's always wise to think and research before investing your money in stocks.
When the market rises, it often creates optimism in the investors making it a bull market, whereas when the market falls, the investors get into a pessimistic attitude wanting to sell their stocks. So when you invest in stocks, all you can do is, sit back and wait patiently for the socks to raise. Happy Investing.
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