The Bulls and the Bears
As an investor, you may have heard of the “bull” and “bear” markets. But do you know why these two animals came to symbolise the stock market?
The bull market and the bullish investor
A “bull” market describes a period in the stock market when share prices move upwards continuously. It derives its name because a bull will swing their horns upwards when striking. A bull also symbolises boldness. So a “bullish” investor believes with a high degree of confidence that the stock market will be moving up and, therefore, will put money into it.
Essentially, a bull market is a direct reflection of the investors' confidence in the stock market. If investors are “bullish” with the stock market, there will be demand for shares listed on it and this will lead to higher share prices.
Sometimes, investors will remain “bullish” for a reasonable period of time and this could span weeks or even months. Such sustained bull market is normally called a “bull run”. In Malaysia, there was a period back in the early 1990s when the stock market was performing extraordinarily for a sustained period of time. That period was now known as the “super bull-run”. Some investors are still longing for the return of that period.
Investing in the bull market
What motivates investors during bull markets is the chance of making quick capital gains when share prices rise. Usually, an investor will buy a share, follow its price movements and then sell it as soon as the desired price is reached. Due to the velocity of the upwards movement of the share price, the period between buying and selling could only be minutes in between. However, as simple as it sounds, it is not. No one really knows or can predict exactly when the market will begin its climb or reach its peak. Investors that wish to adopt this investment strategy must be on their toes all the time. They must also be prepared to face the risk that the market may move against them – that the share prices may fall as fast as it goes up, if not faster. |
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