Investing what is a Bull Market

Changing market conditions comes from different factors such as government actions and policies that stimulate the economy, current events that slow down market activities, changes in economic activity, and investor attitudes as well. General conditions in the securities markets are usually classified as “bull” or “bear” market. These conditions depend on rising or falling of securities prices over time. This metaphor has been used on the way the animals such as bull and bear attack their enemies. The bull attacks through their horn upwards while the bear swipes their paws down into the opponent. 

The term “bull market” simply refers to upward trend in the whole market. Here are some characteristics of bull market:

Favorable Market

Generally speaking, a bull market is associated with favorable market. Competition is essential and crucial to the proper flow of economy and it is among the sellers and buyers that drive the prices of securities. Favorable market is marked as a positive market performance and improvement in the overall economy, as well as the competitive investors and flow of securities prices.

Rising prices

Rising prices give you an idea about inflation. However, the increase in price in bull market as related to inflation is merely different. Inflation is a continuing rise in the general level of prices of goods and services, thus commonly referred to as a harmful one in the economy. Rising prices simply means increasing in investment’s value.  Prices in the market such as assets and stocks rise overall due to increased earnings. Moreover, investors experience higher and probably positive returns on their investments during a bull market.

Investor optimism

Great fortunes are made and lost and it all depends on the right decision and timing of investors. Investor optimism simply means that more and more investors attempt to anticipate and take risks in the market’s ups and downs, as it is difficult to predict. The market efficiency encourages investors to buy securities such as stocks, bonds, and other income- generating investments that will provide equity capital to businesses as well as more growth outcomes and capital gains.

Economic recovery

Fluctuations in the economy level is varying at times. What makes a bull market become obvious is when the economy starts rising from depression. The swings in the economy such as rising rate of unemployment, continuous bank runs, low quality of life, and slow business conditions manifests the recessionary phase of the cycle. Perhaps, there is what the economists called the expansion phase. Commonly called as economic recovery, the economic conditions suddenly begins to rise again, the GDP grows rapidly, and the rate of unemployment declines. This eventually blossoms into another peak.

Government stimulus

The government affects the economic efficiency as it performs several roles and functions related to spending and budgeting. Government spending along with its monetary policies exert an influence on economy’s stability and stable prices. Undertaking an economic action through policies and activities make it possible to improve the society, thus gaining potential opportunities which will later lead to bull market.