Before I start off with things, there are few terms that you need to familiarize. These terms are mostly used by investors, brokers, etc.. who are actually into the field. If you are not familiar with them yet, well worry not you will soon get to start using them. The terms are pretty simple: Bull & Bear
Now, when I say these terms trust me, they don’t have anything to do with animals.
Bull: Bull is the term used when the stock is rising. These are the golden days of the market. The market is called the bull market. During this time the economy is great and the GDP is growing. This is the time when you say that the market is high. Now that the market is up, it is easy for you to pick up your stock. When a person believes that the stock will go up, king of making him/herself more optimistic, you call that person a “Bull” and their attitude is mostly called “Bullish outlook”. Sometimes bull market can be dangerous since the stocks are higher value. However, the bull market is not permanent. It changes.
Bear: Bear is just the opposite of Bull. In bear the stocks are falling and the economy is very bad. The values of the stocks are low and it is difficult for the customer to choose among them. This is because they are worried about the lower costs of the stocks. It may not be beneficial to the investor. The most important thing to consider is that even if it is not profitable, it should not turn out to be a loss. An investor must be careful in choosing the stocks in a bear market. When bull market is a walk in the park, bear market is a walk on the wild side. Any person with the pessimistic attitude of expecting the stock to go down is called a “Bear” and has a “Bearish outlook”.
When one needs to survive in a bull market and a bear market, he has to know the trends vry well to predict the future of the market. This way you may find it easier to decide whether to sell or buy shares. One thing I need to mention here is that no one knows better about the trends than the stock brokers. They are professionals. They work mainly to find out the trends.
The two most important strategies to deal with bull and bear markets are short selling and long position respectively. Short selling is a strategy wherein the investor sells the stocks expecting the price to decrease. Once when the price decreases he buys the same stock that he had sold. This way he gets to have both the stock and the difference in the money as profit. Long position is a strategy in which stocks are bought when their price are low and sold when their price increases. Now you see that in both the cases a stock broker can be of great help. Especially in case of a full service stock broker. He makes a complete analysis and gives you what you need.
The next way is the call and the pull option. Call option is for the bull market in which you have the right to buy a stock at a specific price until a particular date. When the stock rises the buyer can buy it for a lower price and sell it on a higher price. Pull option is to the right to buy a stock at a particular price until a particular date. The pull option is for bear market. When the stock falls, you can sell the stock at a higher price and thus see profit in it. This again is done with the help of the stock brokers. They have got the right tools to deal with these.
As you can see stock brokers are there to carry out trade on behalf of us. So why worry? They make profit for your investment. They are great at predictions and are mostly right in it. The trends are most important in a bull market and a bear market and hence let the professionals deal with the trends.