Even those who don’t invest in the stock market have probably heard their friends, acquaintances or family members who do, use terms like bulls and bears. They would probably even know that these terms allude to share prices given that there is so much talk in the market about things like a bull-run, a bear cartel and so on.
Those of you who invest in the stock market would of course know that a bull denotes an investor who expects the share price to rise and a bear denotes an investor who expects the opposite. When the economy is doing well, and the market is upbeat as it expects corporates to do well, the stock market prices tend to rise consistently providing an incentive for bulls to buy shares in the hope that the rising prices will earn them a profit.
On the other hand during a bearish phase, an economy witnesses a serious downturn and there is negative sentiment in the market, on account of low employment and falling business revenue. This leads to a persistent fall in market prices. There are those who do short selling of shares they do not own in a bearmarket, hoping to then end up buying the same shares at much cheaper prices leaving them with a neat profit. Others wait for the share prices to drop as much as they can and then proceed to buy in the anticipation of a market rebound.
So there you are-you now know what the essential difference between the two types of investors is. As to whether you are a bull or bear, our considered advice is that rather than label yourself as a particular type of animal, you might want to take rational investment decisions. The market for most part is a bullish one, and thank God for that, as rising share price means a high rate of return.
At 10paisa.com, we keep providing you valuable biweekly market research based recommendations on the stocks to pick for investment and this is something that can fetch you quick returns in a bull market on account of the fast rising prices. Similarly, during the bearish phase we offer similar advice on quality shares, which one can pick up at very low prices. Since the shares we research and pick are those of companies with sound economic fundamentals, the investor can look at extremely handsome returns when the market inevitably rebounds.
The bear market as a rule lasts for a very small period of time, as compared to a bull market, providing impetus for investors to take advantage of falling prices to buy quality shares while it lasts. What we at 10paisa.com never suggest, is to sell short, during a bear run as derivative trading is not something that we are much in favour of. The centrepiece of our investment strategy is to focus on quality small-cap stocks that assure reasonable to high return over the medium and long run.