source: http://www.indianmoney.com/
I know you heard these terms during the market crash last year. And I know you googled these terms but lets try to remember them and understand what these words really meant.
As usual lets barrow Wikipedia’s definition. There simpler and easy to understand:
A bull market is associated with increasing investor confidence, and increased investing in anticipation of future price increases (capital gains). A bullish trend in the stock market often begins before the general economy shows clear signs of recovery. It is a win-win situation for the investors.
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. According to The Vanguard Group, “While there’s no agreed-upon definition of a bear market, one generally accepted measure is a price decline of 20% or more over at least a two-month period.
In a Bull market the price of stocks are rising or there is what we call an uptrend because investors, like you and me and the rest of the investing public, sees a recovery or a possible gain in a stocks performance or the general economy has been doing good and thus it creates a positive outlook in the next period. In an uptrend the real winners are the ones that have bought stocks at a near bottom price. This is what we call taking profits. For example you were able to buy shares of Company Willsoongoup when it was still at 1 peso per share, after the fiscal period or after some time the Willsoongoup company reported a good performance at the same time the general economy is good and investor confidence is back. Stock prices begin to rise and in time your one peso Willsoongoup stock now has a market value of 12 peso per share. and in general the market is like that. That is what we call a Bull market and selling your Willsoongoup stock which you bought at one peso and earning while it is at that level is taking profits.
Bull markets sometimes have a sudden swing going down but the term applies to the general market. So in some areas some may not performing well but in general the market,when we say market we mean particular market like PSE or NYSE, in our case the mining sector has always been down but the general PSE is up.
Again the winners in a Bull market are those that have bought the shares at a lower price and able to take profits. If you were about to buy stocks you are in a way in the losing side because you are buying the stock at a very high cost. That is why Bull market is sometimes called seller’s time.
In a Bear market there is a general decline in stock prices over a period of time. Just like what happen when the financial crisis erupted affecting the US market and then other markets followed. In such situation one must sell their stock before it goes below your cost. This time its called a buyer’s time or bargain. Stock prices are low that you can stretch the buying power of your money. But in this time as well buy stocks that has good fundamentals. Stocks of blue chips companies would be good but also their are good companies that has some intrinsic value. Always review their financial statement and determine growth and profitability performances.
A bargain does not necessarily mean a good buy. Choosing the right stocks while they are at a bargain price gives you better chances of earning when the stock market starts to pick up.
On the other hand the terms in the Black and In the Red is a way of categorizing stock trading performance. When the stock is in the Black it means it is on the gainers side. These stocks have perform well in that particular stock trading session. In the Red means the stock has decline making it in the decliners board. In the past stock decliners are known by writing them in the board using red ink thus the term in the red, while gainers are since written in the normal ink which is black thus gainers ended up being term in the black.
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