In the stock markets we have often heard the term bull and bear.

In the stock markets we have often heard the term bull and bear. To put it simply, bull market means that the market is up whereas bear market means that the market is down.

Bull market is used to describe an economic environment that is growing and optimistic. It generally means that all asset classes such as bonds, stocks and real estate keep rising for stretched periods of time. Some of the key indicators of a bull market are:-

1. Rising stock prices- People are confident about the economy as a result of which the stock prices will rise.
2. High gross domestic product- A high GDP goes hand in hand with high consumer spending. This is a common indicator of a flourishing economy.
3. Low unemployment rates- Growth in businesses means growth in the workforce. A lot more people will have jobs in a bullish market.

So in a nutshell, a bull market is that condition where prices are rising or they are expected to rise. Bull markets may last for years as well.

Bull market is the opposite of a bear market. This is characterized by falling prices and there is a lot of pessimism around. A bull thrusts its horns up into the air while a bear swipes its paws downward. So if a trend is downward, it is a bear market.

In a bear market, investors generally sell their stocks and there is often analysis paralysis since they wait for the stocks to reach the bottom. Investors generally like to see an upmove before they jump into a stock. Loss aversion plays a major role. Investors prevent losses of the same amount compared to a gain and that is the reason why the bear markets seem prolonged. Common sense says that once a stock has fallen, one should buy it. But investors mostly keep on waiting and generally they miss the bus since there is a sudden upmove. In terms of definition, if the GDP de-grows for 2 consecutive quarters, it is termed as a recession. This is the time when the markets tank the most.

Thus to conclude, bull markets are when there is a lot of optimism in the markets and people keep buying shares as if there is no tomorrow. In case of a bear market, people sit on the sidelines waiting for the markets to turn around. Both the scenarios are good for long term investors. In bull markets the patience of the long term investors is rewarded whereas bear markets give them an opportunity to buy for another long period.

Panic are greed are the 2 biggest enemies of an investor. Both the emotions should be kept at bay in both the scenarios.

With this I conclude the video. Thank you for watching the same!