What is a Bull Market?
Period of rising prices. Usually begins at the end of a recession, or bear market, after optimism in the market improved.
The phrase Bull market is most often used to discuss conditions in the stock market but can apply to other financial markets or assets including real estate, currency, and bonds. bull markets are not defined by the normal rise and fall associated with the daily trading of securities but rather defined by a period of steady and extended periods when a large portion of security prices are on the rise. Generally speaking, bull markets occur when stock indexes such as the Dow Jones Industrial, increase at 20% and continues to trend upward.
Bull markets are a part of the financial market cycle. Most financial markets go through periods of ups and downs even if the overall trend is growth. This normal fluctuation is called the stock market cycle. Bull markets represent the growth period and often come after a bear market, which is a period of pessimism associated with an extended period of falling stock prices.
Some key economic indicators that characterize a Bull market include:
- Strong gross domestic product
- Low unemployment rates
- A rise in corporate profits
- Increase in IPO activity
Consumer and investor confidence will climb during the bull market period, and there is generally an increased demand for stocks as market optimism leads investors to take a more active part in the market in an effort to increase earnings.
Many investors attempt to take advantage of a bull market to earn greater profits using a “Buy and Hold” method. Using this method, investors identify stocks to buy at the beginning of the trend and then attempt to sell them when they’ve reached their peak before selling them.
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