What is a Bear or Bull Market?
A bear market is a prolonged period of falling stock prices, usually marked by a decline of 20% or more. The opposite is a bull market, in which prices are advancing in an upward trend.
Are We in a Bull or Bear Market?
Markets are relative rather than absolute, as the market changes every second, so whether we are in a bull or bear market will depend on the time frame being referenced.
Investment strategies are dependent on the holding period for an investment, meaning day traders will try to profit from a bull market that may last an hour, while investors hold positions through bull markets that can last more than a decade.
Is it Better to Buy in a Bull or Bear Market?
Bull markets rise whenever an economy is sound and stable, which makes for a more reliable market, but typically comes with higher stock prices.
Bear markets occur during a declining economy. Stock prices are lower, but slightly more dangerous to invest in because prices could continue to sink and be volatile. This makes them a riskier investment, but more likely to yield higher profits.