Lions and tigers and bears… and bulls? Is that the saying?
Hmm, don’t think so. So, how are these two animals related?
While I would like to tell you that today’s discussion is all about some cute (if not varying degrees of scary) animals, that wouldn’t be super relevant to our financial education, now would it?
In the investing world, the terms “bull” and “bear” refer to market conditions.
While this might be less exciting to you than a rodeo or a zoo, we think it’s cool.
And, more importantly, understanding the difference between bull vs bear markets is extremely relevant to helping you formulate your financial and investment strategy.
So, listen up! We’ll go to the zoo or something later, if you’re good.
What’s “The Market?” Can I Go Shopping There?
Well, kinda. While we’re still talking about the exchange of goods and services between buyers and sellers, a financial market is a little more abstract than where you get your groceries.
The term market simply refers to trading. The gold market. The securities market. The housing market. The stock market.
These are markets we hear referred to in the abstract, but what are they exactly? And how do they impact our lives?
When it comes to investing, the stock market can basically be in two different states: a bull market or a bear market.
These terms reflect how the market is currently doing. And how the market is currently doing can have a BIG impact on how you are currently doing.
Understanding what kind of market we’re currently in can help you make investment decisions.
Surprisingly, a bull market is the good kind of market. I would think that the visual of being rammed with a big pair of horns would be a bad thing, but that’s just me.
A bull market is a market that is on the rise (like a matador being vaulted into the air? Is that where it comes from?) and economic conditions are generally favorable.
A bull market has seen a sustained increase in prices and therefore investors have faith that the uptrend will continue over the long term. A bull market is associated with a high employment level and a strong overall economy.
In short, things are going good.
In the case of a bull market, the smart and strategic thing to do as an investor is to take advantage of rising prices early.
The ideal situation is that you are able to buy stocks early in the trend and then sell them when they’ve reached their peak.
In general, investments are more secure and more profitable when we’re in a bull market, so this is the time to invest!
You make money by taking advantage of the thriving market. Lucky you!
A bear market is the bad market. This one I understand. Like getting mauled by a bear, right? Or like, “oof, work has been a bear today.”
A bear market is the opposite of the bull market. It is majorly in decline.
Share prices are continuously dropping. Investors believe that the downward trend will continue and therefore contribute to the downward spiral by not having any faith that things will get better.
The economy is slow and unemployment is high. You know, fun stuff.
A market is only considered a true bear market when it has fallen 20% or more from recent highs.
This is sometimes accompanied by a stock market crash.
In a bear market, the chances of losses are greater because prices are continually losing value.
Often, people invest while prices are low hoping that there will be an upturn, but take losses before the turnaround ever occurs.
For the most part, investors play it safer during a bear market, as risk is higher.
Infinite Income to the Rescue!
What we’ve described here is how most people handle bear vs bull markets.
But, most people aren’t you. You, in your infinite wisdom, have found us here at My Money My Freedom, where the Infinite Income method can make you money in either market.
In fact, the Infinite Income method actually provides the opportunity to increase your income via dividend stocks in bear markets.
This allows you to give yourself a raise when the market crashes.
Basically, you’ll be so prepared that the market conditions won’t even matter — your investments will continue to pay you, even if the rest of the market is unstable.
The rest of the world shouldn’t be able to derail your whole life if you’ve taken the right steps to maximize your investment strategy.
We believe in this method because we believe that money and investing shouldn’t be confusing, frustrating, or stressful.
You deserve to have more than enough income to live your best life even when you’re being chased by bears.