What is Bull Market?
Bull Market – Definition, Causes, Investment Strategies, Types & more
A group of securities, which collectively face a rise in prices, are referred to as Bull Market, in straightforward terms.
Expecting a rise in the prices can also be referred to as a bullish market. No such metric or calculation exists, which would define the existence of this market situation.
Also, it is mostly driven by the sentiments of the investors, that is their confidence and expectations. This article is to clearly give you the insights of bull trend, its cause and also its examples.
We also have drafted the ways in which you can invest in the stock market, at times of a bull market.
What is a Bull Market?
Bull MarketTimes, when stock market is in a position where the stock prises are on a rise, is known as Bull Market.
There is no specific formula or metric, which would state the bull trend is in function.
Bull Market Meaning simply is when stock prices rise by 20%, after experiencing a downfall of 20%, also before it again fall by 20%. Such a market is difficult to assume or predict and hence, is reported generally after it takes place.
Among the various reasons of rise, one stays to be the investor’s confidence. The way prices are perceived to rise, also have a part to play in the stock market prices.
Hence, the changes in market trends are difficult to examine. Speaking of the segment markets which are considered to experience such changes, stock market remains the same.
Also, any other trading undertaken is related to bull market phenomenon. Examples of the same are currencies, bonds, real estates and commodities.
Types of Bull Market or Bullish Market
Categorization of this is further parted in three ways. That is, there are three types of bull market:
Stock
A stable and a well functioning economy experiences a Stock Bull Market. This happens as a result of the increase in GDP. Also, when companies register top revenues, such a market situation arises.
Gold
Gold Bull Market happens when gold prices are on a rise. It was in the year 2011, when gold prices reached peaks.
Bond
Bond Bull Market is as well a part. However, the positive aspect of this is that, the investor would not face losses, for positive returns are its nature.
Secular
This is a time duration phenomenon. In Secular Bull Market, prices rise for a period ranging in between 5 years to 25 years.
In between such long period, the prices may fall up to 10%, but they would again begin rising. Such a case is referred to as correction.
On the contrary, if smaller sections of bear market indulge in the frame, they are referred to as primary market trends.
Characteristics of Bull Market
The most basic characteristic has already been put forward. It is when an economy is growing or is already strong enough, that it experiences Bull Market.
In simple terms, secure GDPs give rise to this type of market trend, followed by a decline in unemployment.
Other characteristic is that, investor’s confidence rise with the share prices.
Bull Market Stocks tend to have a common and high demand, but this does not necessarily increase the supply.
IPO activities also increase during such a period
Trade activities and interest are highly witnessed in bull markets, as the investors want to gauge in profits.
How to Invest in Bull Market?
Smart investment starts when the right strategies are adopted. Bull Trend is considered a great opportunity by investors, as the prices keep rising.
Here are the ways in which you can Invest in Bull Market, earning possible returns.
- Buy a stock when it starts rising, i.e. early in order to be benefited by the rising prices. Hold the stock for a long period in order to weigh in high returns.
- This method is known as increased buy and hold. Here, the investors witness rising prices, and keep banking in most securities to hold them for longer intervals. This contains a fair share of risk, but the confidence associated leads to reward.
- As mentioned, earlier, there are small intervals in between bull market. They are either corrections or primary market trends. One shall keep a check on such falls, and simultaneously buy the share in order to get likely returns.
- Investors can also attempt to carry out a full fledge trading practice. As in, small interval investing and likewise similar investing strategies. Active trading can be undertaken, in order to extract out maximum profits from such a great market condition.
Example of Bullish Market
Some of the real lives Bull Market Example are precisely given below:
At the end of the WWII, that is from 1940s to 1950s. It was the time when a lot of individuals who went to war returned back home.
As much as millions of soldiers reportedly returned home and the US economy took a rise, thereby leading to bullish market.
Another this type of market condition was witnessed along the period 1980s to early 2000s. It was before the dot-com bubble busting took place.
2017 was again the year, when bullish market was witnessed in the US economy. This led to increase in jobs, higher returns on investments.
At this time, the market started getting back into track, after the housing market cash because of defaults happened.
Bull Market – Conclusion
The name and reference of a Bull Market is made from that of a bull, wherein it hunts down or takes down it enemy by piercing in its horns and swinging it upwards.
The upwards trends of the market are defined by the nature of the bull, and the name emerges from the same.
While the price trends are closely monitored by people, the ones who say the prices are going up are known as bullish.
On the contrary, the ones who say the prices are falling are mentioned to be bearish. Bearish is the opposite of bullish.
Bull Market FAQs
Ques – What is bull market?
Answer – At times when the stock market is in a position where stock prices are on a huge rise, it is known as bull market. No particular formula is however formed which would state that the bull trend is in function.
Ques – What are the different types of bullish market?
- Stock: A pretty well functioning economy experiences a stock bull market because of an increase in GDP.
- Gold: this happens when gold prices are on a high rise.
- Bond: here the investors wouldn’t face any loss
- Secular: In secular bull market, the price rises for a period of 5 to 25 years.
Ques – What are the characteristics of bull market?
The investor’s self esteem rises along with the share prices.
The market stocks tend to have a pretty common demand which is high but does not necessarily increase the supply.
Read activities are highly anticipated in bull markets because investor wants to engage in profits.
Ques – How to invest in Bull market?
Answer – The first thing you need to do is buying a stock when it starts to rise. Hold the stock for a given period of time in order to bring higher returns. There are small intervals in between bull markets. It is either corrections or primary market trends so one should always keep a check on it and only then go ahead with the share. Investors can also carry out a full fledged trading practice. Active trading can also be kept in mind in order to figure out how to extract maximum profits.
Ques – How to make money during Bull market?
Answer – First and foremost is making long positions. It is done by simply purchasing of a stock or any other security in anticipation that its price will rise. Then comes the calls options which is the right to buy a stock at a particular price until a particular date comes up.
Ques – Who is the Big Bull of Indian stock market?
Answer – Rakesh Jhunjhunwala. He went on to be known as the finest man recognised by every stockbroker in the entire country.
Ques – Why Rakesh Jhunjhunwala is known as – The Big Bull?
Answer – Rakesh Jhunjhunwala had said that 98% of the money in the stock market is made by being a bully. He had even used techniques like technical evaluation and had made immense long-term returns. This is the reason why he is called the big bull, an original thinker.
Ques – What is the investment strategy during Bull market?
Answer – The investment strategy during bull market is to buy calls. Investors have the capacity to control plenty of shares of a stock while also having immensely less capital at risk.
Ques – What is Secular Bull market?
Answer – A secular bull market is one wherein a long time trend line is only exceeding upward.
Ques – How to check if it is Bear or Bull market?
Answer – It is pretty easy to focus on a specific time frame or to consider the sequence of weeks on the price chart. Charles Dow applied this theory and stated that higher highs and higher lows describe a bull market whereas lower highs and lower lows are concerned with bear market.
