Bulls and Bears... what?
What does a bull and bear market really mean to working people?
Is this talk the gibberish of a morally shallow Wall Street scumbag? Well my friends, a Bull Market and a Bear Market have an actual meaning and you don't need your MBA in finance to understand what it really means and how it may effect working people.
Recently there has been a lot of talk about the stock market moving from a Bull Market to a Bear Market and what that might mean for the US economy and the economy around the world. These predictions are often followed by statements about the dire situation of our economy.
According to Nasdaq, a Bull Market occurs when there is an assumption that stocks will continue to rise in price. Ideally, you'd like to buy the stock in the lower range and collect on earnings as the stock continues to soar. Any losses are viewed as minimal or temporary within a Bull Market. A bull market is usually accompanied by advice to buy, buy, buy and to be an aggressive investor. Like a raging Bull, the market and all it's stock investors bully forward. That's a Bull Market.
In a Bear Market, there is an assumption that stocks will fall in price. Stock prices are assumed to be continually falling. Losses are considered to be substantial ande any gains are considered to be minimal or temporary. In a Bear Market, the advice is to try and minimize losses and not invest. According to Investopedia, the market must fall at least 20% for a Bear Market to exist. A bear hibernates, sleeps and rests and a its heartrate and metobolism decreases during hibernation. The market doesnt move much, in fact it decreases. That's a Bear Market.
With the market currently at about a 17% loss, it looks like a bear market is about to occur. So what does that mean to the average working Joe and Jill.
Bear Markets can be bad becuase it means that some employers may lay off its workforce and it has an affect on Pensions since funds will not see growth by investments, in fact, Pensions will experience loses. In a Bear Market, no one makes money.
Even the Wolf of Wall Street may have to sell his fith home in Barbados.