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Bull Markets Explained
There’s an old adage on Wall Street: “Bulls make money, bears make money, pigs get slaughtered”. In this three-part series we’ll learn all about bull markets, bear markets, and how to avoid being a pig. Bear markets explained here.
What is a bull market?
Wikipedia describes a bull market as “a period of generally rising (stock) prices”.
Why is it called a “bull” market?
The terms “bull market” and “bear market” are often thought to have come from the way those animals attack their foes: a bull thrusts its horns upward into the air while a bear swipes downward with its paws.
How long do bull markets last?
There is no exact rule but bull markets are generally periods of rising prices that last for at least several years. The average bull market since 1930 has been about 4 years.
How much does a bull market go up?
Most people expect stock prices to at least double over the course of a bull market but the gains can vary greatly. A bull market in the early 1970s resulted in a gain of only about 75%, whereas bull markets in the 1980s and 1990s each gained well over 800%!
What does a bull market look like?
Bull markets are usually characterized by an expanding economy, strong corporate profits, and optimism and confidence among investors. Early in a bull market the Federal Reserve usually lowers interest rates to help the economy gain momentum. But if the economy begins to grow too quickly later in a bull market, the Federal Reserve may raise interest rates to keep inflation under control. This interaction between the economy, the Federal Reserve, and the stock market gives rise to an area of study called business cycle analysis. We’ll talk about that in a future article.
What causes a bull market?
A bull market is usually the result of improving economic conditions which lead to higher profits for businesses across the country.
What should I buy during the next bull market?
Each bull market is different and there’s no way to tell in advance which sectors will be the most profitable. At Momentum, we continually monitor all the major sectors and let you know which ones currently offer the best profits.
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