Bull and Bear Markets

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					Bull and Bear Markets

  An FLDC Presentation
     What are Bull Markets?
• A bull market is associated with:
  –increasing investor confidence
  –increased investing in anticipation
   of future price increases.
• A bullish trend in the stock market
  often begins before the general
  economy shows clear signs of
  recovery.
Why is it Called a Bull Market
– The term "bull" is used to describe the market,
  because bulls attack by pushing their horns
  out and up. Hence the thrusting motion up
  resembles the upward move of the
  markets. Also, when bulls run together, they
  do so without looking back and go full steam
  ahead. This is also the mentality of the
  markets as traders and speculators trip over
  themselves attempting to jump on the band
  wagon for quick gains.
Characteristics of a Bull Market
• A bull market is accompanied with a
  number of identifiers. Below are some
  examples:
  – High P/E ratios
  – Endless news and media coverage of the
    market
  – Marginal retracements after each successive
    high
 Notable Examples of Bull Markets
• One bull market occurred right before the
  great stock market crash of 1929. It lasted
  10 years
• The most recent bull market lasted the
  longest time to date, which was 15 years.
  This bull market ended in the year 2000.
     What are Bear Markets?
• A bear market is a general decline in the
  stock market over a period of time. It is a
  transition from high investor optimism to
  widespread investor fear and pessimism.
Why is it called a Bear Market?
• During the 18th century, fur traders would
  flood the market with bearskins in the
  expectation that prices would rise. They
  did not. The flooded market caused prices
  to fall and a recession or a depression,
  high inflation and high unemployment can
  occur if it continues over a longer period of
  time
Characteristics of Bear Markets
• In a bear market more people are looking to sell than
  buy.
• During a bear market, market sentiment is negative as
  investors are beginning to move their money out of
  equities and into fixed-income securities until there is a
  positive move. In sum, the decline in stock market prices
  shakes investor confidence, which causes investors to
  keep their money out of the market - which, in turn,
  causes the decline in the stock market.
• A bear market is associated with a weak economy as
  most businesses are unable to record huge profits
  because consumers are not spending nearly enough.
  This decline in profits, of course, directly affects the way
  the market values stocks.
Notable Examples of Bear Markets
• The first major bear market came after the
  stock market crash of 1929.
• The second most notable bear market is
  occurring now.
      Things to Keep in Mind
• When looking at market trends, one
  cannot make a judgment on the general
  trend of the market based upon 2 or 3
  weeks of trends.
  – Quarter, biannual, and annual trends are the
    best way to determine whether a bull market
    or a bear market is in process.
 Tips for Taking full Advantages of
            Bull Markets
• Buy “hot” stocks when they are at low
  prices.
• It is generally safe to invest more than
  10% of your annual income in this type of
  market trend.
• Keep an eye out for different industries to
  see which ones show the most growth.
 Ways to Handle Bear Markets
• Generally invest in save options such as
  Certificates of Deposit (CD’s)
• Invest in Fixed Income Securities
• Invest in government regulated stocks, as
  these don’t change dramatically in value.
  – Water, natural gas, electricity (utilities in
    general)
                   Conclusion
• There is no sure way to predict market trends, so
  investors should invest their money based on the quality
  of the investments. At the same time, however, you
  should have an understanding of long-term market
  trends from a historical perspective. Because both bear
  and bull markets will have a large influence over your
  investments, do take the time to determine what the
  market is doing when you are making
  an investment decision. Remember though, in the long
  term, the market has posted a positive return.

				
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posted:7/27/2012
language:English
pages:13