What is a Bull Market

We often hear the terms 'bull' and 'bear' with respect to stock markets in the world. Often analysts describe the market trend as bullish or bearish depending on the conditions prevalent in the markets. Both bull market and bear market have their own characteristics and features. A bull market is that kind of market where the prices of securities are continuously rising because of some strong signs in the economy. Apart from economic growth, there are many other signs which can lead to the start of a bull market. Let us try to understand what it is with the help of its characteristics in the next section.

Strong Economic Growth
As said above, strong economic growth are the main reasons for a bull market. Investors would dare and buy stocks heavily only when the overall economic scenario is extremely positive. The financial condition of companies greatly improves in a growing economy and this reflects in the share price, causing it to go up. If the economic growth data is positive along with increased exports, then this may be the reason for a bull market.

Economic Recovery after a Long Time
While we study what is a bull market, knowing its characteristics is important, and economic recovery after a long time is definitely one of them. The economies of most nations in Europe were in a economic recession and there was no growth two years ago. However, later on, the situation improved and this leads to the start of such a. From the lows formed two years ago, global markets have moved up sharply and many investors who bought stocks at lower levels got huge profits in this bull run.

Strong Investor Confidence
Strong investor confidence and heavy buying is also a main reason for a bull run in the stock markets. Stock prices can go up only if the stocks are bought in huge volumes. In every bull run in stock markets, it has been observed that the participation of domestic or retail investors is important, along with the participation of institutional investors.

Good Financial Results
Better financial results have always been the driver for stock prices across the world. Stocks of companies posting good quarterly and yearly results have always shown an upward trend. If all companies are able to post good results, then the broader markets react sharply and move upwards. This itself is the sign of a bull market.

Rising Foreign Investments
Rising foreign investments in stock markets can also be the cause of a bull market. Foreign investments by mutual fund companies, large equity funds and wealthy individual investors can raise the stock prices much beyond the true or just valuations. So, if you are stock trading in such a market, then keeping an eye on foreign investments is a must.

What to Do in this Market?

The first thing you need to observe is that whether the appreciation in stock prices is as per the fundamentals and valuations or not. Many times, stocks of companies not performing well too go up due to an overall positive trend in the stock markets. In case of any problems, these stock prices will come crashing down causing heavy losses. So, in a bull market, it is important that you buy stocks of well performing companies only. Investing in stocks can be complicated for beginners and hence seeking help from experienced people is a good idea. A bull market can be the best time to lock your profits and bring home the money before any significant correction lowers the stock prices considerably. Avoid referring to newspaper and other suggestions. Conduct a thorough stock research for your own advantage.

Hopefully, this article will help you to understand the markets well. By following these instructions, you can ensure a profitable journey in equities. All the best!