Saturday, April 19, 2014

Bull or Bear Market?

 In Wall Street, “Bull” means that the market is going higher. A bear market means that stocks are in a downward trend. Technically, bull and bear markets stem from the movements of major averages, such as the Philippine Stock Exchange Index. A decline of more than 10% from high is called a correction. A decline of 20% or more is termed a bear market. The opposite holds for the bull. A rise of 20% or more from the low constitutes a bull market. Some market observers contend that these moves have to be confirmed over a period of time. And a market may be termed bearish or bullish ahead of the 20% triggers, due to changes in investor confidence or broad market characteristics.

The bull and bear trends -

Rising stock prices
Falling stock prices
Rising earnings
Falling earnings
Low inflation
Rising inflation
Low interest rates
High or rising interest rates
Fund inflows
Fund outflows

A bull market is a long period of rising prices of securities, usually by 20% or more. Bull markets generally involve heavy trading and are marked by a general upward trend in the market, independent of daily fluctuations. For example, from 2003 to 2010, Filipino investors enjoyed two bull markets: one lasting from 2003 to 2007 and the other from 2009 to 2010.
Philippine Stock Exchange Index Bull and Bear Years
A bear market where a group of securities falls in price or loses value over a period of time. A prolonged bear market may result in a decrease of 20% or more in market prices. A bear market in stocks may be due to investor’s expectations of economic trends; in bonds, a bear market results from rising interest rates. Investors are “bearish” when they view stocks as being in sustained decline.

Source:  The Wall Street Journal

No comments:

Post a Comment