Like the 2011 and 1998 pullbacks, it was a brief, shallow downturn triggered by concerns that a U.S. recession could be imminent. The market tumble of 2011 began with a sovereign debt crisis in Europe. Standard & Poors also issued its first U.S. credit downgrade in history following a political dispute in Congress about the U.S. debt ceiling. The global currency volatility triggered a sharp one-month pullback by the S&P 500 that was quickly forgotten after the index bounced back and hit new all-time highs just three months later.
This bull market was characterized by strong earnings growth, low interest rates, and investor optimism. Despite its length, the bull market was relatively volatile, with several corrections and pullbacks along the way. The technology sector significantly outperformed https://www.bigshotrading.info/ the broader market during this bull market. Perhaps the most aggressive way of attempting to capitalize on a bull market is the process known as full swing trading. Some investors watch for retracements within a bull market and buy the dip during these periods.
Bear versus bull market: Here’s the difference and what investors need to know
Both bull and bear markets are part of the normal long-term cycle of investing. Investors will encounter both types of markets over time and their portfolio should be constructed in order to allow them to weather both types of market environments. A potential downfall for investors in a bull market is a reluctance to sell and take profits. Especially in a prolonged bull market, investors can forget the pain they experienced in the last bear market and feel like the bull market will never end.
Markets experience extended cycles where prices are generally rising or falling. Savvy investors pay close attention to bull versus bear market cycles to avoid buying stocks when they’re overpriced or selling when they’re undervalued. Stock prices are informed by future expectations of profits Bull and Bear Market: Definition & Difference and the ability of firms to generate cash flows. A strong production economy, high employment, and rising GDP all suggest profits will continue to grow, and this is reflected in rising stock prices. Low interest rates and low corporate tax rates also are positive for corporate profitability.
Where Did ‚Bulls‘ and ‚Bears‘ Come From?
In a bull market, the increase in stock market prices boosts investor confidence, which causes investors to put their money in the market in the hope of obtaining a profit. When the bear market begins, the investors’ confidence collapses, and they believe prices will continue to fall, perpetuating a downward spiral. A bull market indicates a sustained increase in price, whereas a bear market denotes sustained periods of downward trending stock prices – typically 20% or more.