Difference between Bear and Bull Markets

On the other hand, in a bearish market, the outlook is negative. Here, the economy is not doing so well. The stock prices are decreasing, while the unemployment rate is high, and the GDP is low. Hence, it can be seen why the outlook will be negative, with people thinking that things aren’t going to get better.

While most people wish it, it is not possible for an economy to constantly stay in bull mode. The economy is bound to face periods where it is bullish, whereas in other it is bearish. One will often follow the other after a while.

Many people tend to buy in a bullish market, as they don’t want to feel like they missed out on the gains which they may make as the market is going up. These same people tend to sell in a bear market, ideally before the market falls too far. However, there is no way to accurately predict a market trend, which is why many people tend to lose money in stocks. A bear market may rise a bit before continuing to fall even further. Similarly, a bull market may fall a bit before continuing to rise. These are called false starts, and can be very misleading. The ideal way to make steady investments is to make fixed size investments, and holding those investments for a long period of time. This creates a bit of stability in a world of trends.

The terms are often also used to describe a person, and their outlook. If a person believes that the stocks will go up, then they are called a “bull”, whereas if a person believes that stocks will decrease, then they are called a “bear.”

Comparison between Bear and Bull Markets:

Reference: Wikipedia, Time, BrightHub, Investopedia, Stock Trader, Money Instructor Image Courtesy: sketchplanations.com, unisuper.com.au

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