Market conditions are usually referred to as “bull” or “bear” in the investing world. These words define the general state of stock markets, such as whether they are appreciating or falling in value. As an investor, the market’s direction is a critical factor that affects your portfolio significantly. As a result, it’s crucial to comprehend how each of these market conditions could affect your investments.
A rising market is referred to as a bull market and has generally positive economic conditions. A bear market occurs when the economy is slowing and the majority of stocks are losing value. Because investors’ views have such a big impact on the financial markets, these phrases also refer to how they feel about the market and the resulting economic developments.
A persistent increase in prices characterizes a bull market. A bull market in equity markets refers to a rise in the price of a company’s stock. During these periods, investors frequently believe that the uptrend will continue in the long run. The country’s economy is normally strong in this scenario, and job levels are high.
A sinking market is referred to as a bear market. Unless a market has declined 20% or more from recent highs, it is regarded a true “bear” market. In a bear market, stock prices continue to fall. As a result, investors believe the downward trend will continue, which feeds the downward spiral. During a bear market, the economy slows and unemployment rises as businesses lay off employees.
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