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B is for Bulls and Bears (NOT Birds and Bees!!!!)

Understanding Bull Markets vs. Bear Markets and their respective implications

Author

Bailey
September 21, 2023

Happy Thursday Monarch fam bam 💥

Bailey here, coming to you with some sparkling stock terminology 🌟 

Today, we’re rattling the cages of two market mascots - ✨the Bulls and the Bears✨!!!!!

So grab your coffee ☕, put on your learning top hats 🎩, and let’s do this 🚀

High Level: What are Bull vs. Bear Markets?

A Bull Market occurs when the economy is flourishing and stock prices/values are on the rise, whereas a Bear Market occurs when the economy is contracting, and stock prices/values are declining.

Both markets are usually defined as a 20%+ difference from a recent market price.

Where did they get their names?

Hilariously, they’re named based on how each animal attacks its victims. 🤯

A bull swipes upwards with its horns during an attack, which correlates to the stock market activity trending up in a bull market.

A bear swipes downwards with its claws during an attack, which correlates to the stock market activity heading down in a bear market.

Bull Market Explained:

A bull market is present when the stock values witness a broad increase of at least 20% from the last market downturn (indicating a growing economy).

Not a short stint⌛: This favorable market condition can span decades, creating extensive opportunities for investors. Throughout a bull market, minor market corrections may appear (ie: lil tiny ups & downs) but the prevailing trend is 🆙

Driven by: business expansion, rising employment, & consumer spending

Bull Market Example:

After the 2008 financial crisis, the U.S. saw a bull market that lasted over a DECADE!!! (until the pandemic-induced crash in 2020).

Bear Market Explained:

A bear market is characterized by a broad 20% decline in stock prices from the peak (hinting at economic contraction).

~Hopefully~ a shorter stint ⌛🤞🏼: This phase, usually shorter than bull markets, manifests through increased unemployment, declining GDP, and substantial value loss in the stock market.

A pinch of upside: However, bear markets can also open up avenues for investment in value stocks and offer unique buying opportunities for discerning investors.

Bear Market Example:

The most recent & clear bear market came with the housing market crash in 2008.

What this showed: The stock market can definitely tank in response to broad economic distress and uncertainty.

How market conditions change investment strategy!!!

Note: These are general recommendations based on research, not foolproof investment strategies (those don’t exist rip).

🌈 In a Bull Market 🐂 

  • 🚀 Go for Growth Stocks: These babies are the stars of the bull market show, shining bright and performing well.

  • 💰 Invest in Gold or Real Estate: Worried about price inflation? Adding a pinch of gold or real estate to your portfolio can be a spice of life!

  • 🌐 Diversify Geographically: Explore treasures in other regions of the world and ride the international bull wave!

🌨 In a Bear Market 🐻

  • 🏆 Value Stocks are Your BFFs: These gems are the underdogs, often overlooked but pack a punch when the market’s growling!

  • 💎 Increase Bond Allocation: Consider adding more bonds or converting some of your portfolios to cash to navigate through the bear’s den securely.

  • 🌍 Global Diversification Still Rocks: Spread those wings and fly to different market gardens to harvest some international delights! 🍇

🕰 Regardless of the Market:

  • 🌟 Stay Focused on Fundamentals: Companies with solid foundations can build your portfolio a palace over time!

  • 🛋 Buy-and-Hold Strategy is Cozy: If you don’t need the cash soon, nestle in and enjoy the market swings!

  • 🌿 Long-term Vision is Key: Keep your eyes on the horizon and let the passing clouds be just that… passing.

Remember, investing is like crafting a gourmet meal; it’s all about mixing the right ingredients at the right time!

Understanding market conditions (like bulls vs. bears) is just another helpful direction in the recipe of good investment strategy. 🙂 

Happy investing, ladies & lady lads 🎉💕

Peace & luv 4 alwayz,

Bailey

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