Just in case you are new to stock market investing, there will be two terms that you will hear thrown around quite regularly. These are “bull market’ and “bear market”. These two terms will remain in your thoughts once you have survived a day in the stock market world. These two terms are important, that is why you need to familiarize yourself with them.
Here is a brief overview of the two terms, the “bull market” and the “bear market”. Let’s start with the bull market. The bull market is when most traders feel that they have felt something positive about a certain stock market and they want to buy stocks. This will usually happen during a long bull markets period that the stock market would keep going up and up.
As for the bear market, the bear market is actually the opposite of the bull market and it is when the stock market is constantly going down no matter what a trader would do. This will usually happen during the times that a trader loses sleep and if they continually wonder whether they should be selling their stocks.
However, most of the time the market is placed somewhere in between the bull and the bear market. Normally, the better stocks would go up over time and then the stocks of the companies doing poorly would go down. It is always considered wise to always try to pick a stock of company that is doing well or will do well when the time comes.
Now that you know the difference between a bull and a bear market, what does it mean for you. Many times an investor has no control over what is happening in the world that affects the stock market. If the market is experience a downward turn, it is a good idea to invest in defensive stocks. Find those stocks that experience little volatility. Another idea, is to go the sidelines and wait it out. The problem with this trading technique is, you may miss the rally.