Kavan Choksi / カヴァン・チョクシ Provides a General Understanding of the Bull Market

Kavan Choksi / カヴァン・チョクシ Provides a General Understanding of the Bull Market

Almost all investors like situations when the market is doing well, and the prices of bonds and stocks are on the rise. This is widely referred to as a bull market. As Kavan Choksi / カヴァン・チョクシ says, that a bull market tends to occur when financial markets rise for a certain period of time. This period can last for a few months or even years. Bull markets make investors more confident as they are likely to find more returns with their portfolios. It is vital to note that a bull market does not exactly mean that there shall be no tiny dips in the market.  Rather, it mostly indicates steady financial growth as the value of stocks and bonds trend upward on the whole.

Kavan Choksi / カヴァン・チョクシ provides an overview of the bull market

When most people imagine a bull, they usually visualize a strong animal charging forward. Metaphorically speaking, this is how the market typically performs when the economy is doing well and unemployment levels are low.  Bulls are prone to thrusting their horns in the air, which symbolizes the rise in the stock market. In investor jargon, the term “bull” is also pretty commonly used for describing people who purchase securities in the expectation of a price increase.

Throughout history, there have been several bull markets. One of the most recent bull markets, in fact, began in 2009 subsequent Great Recession and lasted for several years until the Covid-19 pandemic caused the economy to shut down in March 2020.  Another prominent bull market occurred between 2003 and 2007 when the stock market experienced substantial growth, with the S&P 500 nearly doubling in value during this time.

Bull markets basically occur when there’s a price increase on securities of more than 20% subsequent to a period of decline. There also is greater trading activity during a bull market, as an increasing number of investors tend to be willing to purchase and hold securities with the goal of receiving capital gains. Securities have higher values during a bull market. Therefore, several investors tend to be willing to pay more for them with the belief that they would appreciate it with time and the market continues to grow. On the other hand, investors who were holding onto specific bonds and stocks can consider selling them while the values are high or make a strategic trade. As a larger number of companies do well financially during a bull market, it also results in better earnings or even shareholder dividends.

As Kavan Choksi / カヴァン・チョクシ says, on the whole, the bull market is a good thing in most cases as it may indicate economic growth and optimism among businesses and consumers. Depending on the sector and the stock, it can also result in equity growth and higher dividends. In contrast to a bull market, a bear market occurs when the market declines and the value of stocks and bonds decreases. During this time, investors typically see a loss in their portfolio value, which also leads to diminished confidence in the market.