Tag: bull market

  • Bull Market – What Everyone Should Know?

    Bull Market – What Everyone Should Know?

     

    stock bull market
    A stock bull market means that investment’s price rises over a long period. Investors’ faith in stock prices lead the prices themselves in a self-fulfilling prediction.  A bull market means profits for investors who own stocks.

    What exactly is a bull market? If you are like me several years ago, you are confused with all these terms, conditions, maths, evaluations, or estimations of the stock market.

    May I be honest with you?

    The truth is that I know nothing about the stock market when I entered. I was foolish, I know. But my desire to earn, to be investor was something I never have had before. It was like this…

    A personal story

    A friend of mine had a grandfather. Extremely interesting figure. He came from Italy to the US as a kid. OMG, he was just 12 when he bought a ticket and came with nothing except dreams about fortune. To shorten this story, after several years of struggling he made his first success. He became a clerk in the office of some broker. Step by step, that wonderful man became very rich. People, listen. Very rich! 

    I wanted the same. ASAP! I asked him for the recipe. Oh, how I would like I never did such a thing! The first lesson was: You know nothing, have to learn a lot. C’mon, man! Give me something else to start. I thought I know everything. I have just finished university. With a diploma in the hands, I thought I know everything possible about anything. Of course, I was wrong.

    That blessed man told me I had to learn. How to, where to go? I spoke with some friends. No help. So, I decided to start. I found a broker, put some money (not a lot) on my trading account, and started to find a stock. That was a nightmare! My first trade was totally a disaster! I placed another trade. The result was the same. In two trades I lost everything. 

    Ok, at least I tried. Then I went back to my friend’s grandfather and asked him to teach me. 

    “You get your first lesson, my son.” 

    OK, I understand. I have to go for basic. And I started to learn. You must learn to have a chance to earn.

    The bull market was the point where I started. I can’t explain why, but I felt I needed to know what it is.

    The term “bull market” indicates a stock market is rising. Of course, every single investor supposes the market to rise. Better say, has a hope it will rise. But having only hope means to stand in the mud. You can slide in a moment and fall. Having my previous experience in the mind, I needed more facts. 

    Nice from this zoological term

    So, I learned that the bull market occurs when the prices rise for 20% or more.  

    Further, I learned that a bull market systematically produces higher highs and higher lows. A stock bull market happens in a strong economy. Nice again, thanks bulls. But what can drive a stock bull market, that I wanted to know?

    And I found (with a little help from my friend) that great revenue, profit, and P/E ratio are the most important.

    The revenue should be in line with the economy, meaning revenue should grow by the speed of economic growth. Here is some interesting part. As consumers spend more on goods and services rise the economy will rise. Super!

    And I came to the companies profit.

    The revenue must generate profit. 

    But some knowledge defeated me. I thought that great profit is a wonderful thing and it is good when the company can generate more profit from the same revenue money. But it is not so simple. 

    And the P/E ratio! The stock price is just the amount of money it will cost to buy a share of a company. But stock prices can vary. If the demand for the stock rise, its price will rise too. The P/E ratio estimates the relationship between a stock price and its earnings per share. 

    I was confused just as you are now, I believe.

    In a bull market

    In a bull market, you’ll notice powerful demand and limited supply for securities. This means that more investors want to buy securities and less want to sell. What will happen? The stock price will rise, right. Let’s go further! Let’s observe investors’ psychology.

    In the stock bull market condition, investors have the hope of earning a profit. They are positive and optimistic. Oh, how I wanted to have that experience. Instead, I was scared to death. I needed more knowledge to sure what I am doing. My first trade was so stressful and, by the way, I wanted to show my older friend that I can learn.

    In the periods of the bull market, people have more money.

    And they are spending. In turn, it stimulates the economy to grow. My old friend told me something important and let me share that with you.

    When it is the bull market, you should buy stocks in the early stage, while they are not too expensive. As the price goes up, just wait for its peaks and sell your stocks. And don’t worry if there are some losses in price. It is temporary. Just invest in more stocks with a higher chance of getting a bigger return.
    I am grateful to him for this lesson. But there was one piece of advice that sounded the most important to me: “Play the market like toreador plays his wonderful performance in the arena. Peaceful, with confidence, elegant. Tickling the bull. You have to know where the limits are, don’t get surprised.” 

    I’ll not. Thank you, my dear mentor. 

     

     

  • The Bear Market Rally How to Recognize?

    The Bear Market Rally How to Recognize?

    The Bear Market Rally Will Come Later This Year?What is a Bear market rally, how to recognize it, what to do?

    By Guy Avtalyon

    Some analysts claim that the bear market rally will come later this year or next. If it will, it is time to get out of stocks. The returns tend to be the strongest 12 months or so before the start of a collapse.

    Historically, profit has been smaller for investors who got out two or three years prior to a recession.

    But, past performance is no guarantee of future results.

    So, are we in a bear market rally or a new bull market?

    We’ve been in a bear market since the market’s peak in early October.

    The current stock bull market becomes 10 years old this month.

    It was a useful time to participate. Especially if you’ve held to an investment strategy that prefers dividend-paying stocks.
    The bull market will end with a whimper. There will not be a bang!

    We’re definitely in a bear market. It started on September 21 of last year, actually. On that day the S&P 500 last hit a record high.

    A standard bull market pattern looks like an elevator. It is described as a gradually rising market with an absence of volatility.

    For example, the bull market of November 2016 to January 2018 was a typical bull market.

    There wasn’t one 3% pullback during the entire period. That was a new record on the market.

    There is always the risk that this time is different due to changes in market structure.

    We are at the beginning of a “new bull market” at least in a headline-oriented technical sense.

    Will it last, or are we fated for a double top?

    This month is likely going to be a crucial point in helping to find the answer.

    Three big news events were set to reveal what markets the world over have been expecting for years already.

    The first was the March 1 trade deal deadline that President Donald Trump had set with China.

    The second is the March 29 Brexit deadline. The third materialized in February with the Federal Open Market Committee releasing its Jan. 30 meeting minutes. In those minutes, “almost all” FOMC members agreed that an announcement to end balance sheet normalization should be made “before too long.”

    What is the bear market rally?

    The stock market is volatile and in continuous changes. Investing in stocks is relatively risky. It can be difficult for even the most experienced analysts to predict where the market is headed at any given time.

    Even throughout times where the market seems to be acting well, stock prices can apparently begin to fall.
    On the other hand, there is a possibility for stock prices to rise in a poor market.

    That is known as a bear market rally.

    A bear market rally is a period during which stock prices increase despite the fact that the market on a whole has been on a downward swing. This is the definition.

    So, once again!

    The bear markets are characterized by falling stock prices. When markets upswing that can be a pleasant turn for investors. Also, it has some disadvantages.

    Bear market vs bull market

    The terms “bear market” and “bull market” are adopted to define the quality of the stock market over a given period of time. They are originated from the behavior of how these animals strike their victim.

    When they’re on the offensive, bulls tend to attack with their horns thrust upward, but bears tend to swipe their paws down.
    When is the bull market, we are talking about high investor confidence and widespread optimism. Through a bull market, stock prices frequently go up within other positive economic factors.

    A bear market, as contrast, is a period of low investor trust and depression. Stock prices normally fall during bear markets. They usually project overall economic downfalls.

    Dangers of bear market rallies

    Through a bear market rally, stock prices regularly rise between 10% and 20%. Bear market rallies can last from a few days to several months. Anyway, they are short-lived.

    The confusing thing, a bear market rally with an approaching bull market, are both periods where stock prices rise.
    Where is the difference?

    The difference is that bear market rallies are temporary, and they’re almost always come before periods of more drops. Just before the stock market crash of 1929, for example, there was a brief bear market rally. Unfortunately, that really was replaced by a deeper crash that in the end resulted in the Great Depression.

    At first sight, a bear market rally sway appears like a good thing. The investors have a break from the descending direction of the market.

    True is, bear market rallies can be terrible for investors who start buying stocks because they hope that things are turning around on a long-term cornerstone.

    And, what happens then?

    They lose money when those rallies end and the market proceeds its continuing drop.

    The reality is that it is hard to separate the bear market rallies and new bull markets.

    It makes buying stocks a gamble.

    Especially if you are for short-term investors looking to get in and get out quickly.

    Long-term investors are not burned when bear market rallies give way to plunging stock prices.

    They can wait for the crisis to go away.

    Don’t waste your money!

  • Are we witnesses of the historical period on the stock market?

    Are we witnesses of the historical period on the stock market?

    1 min read

    What are basic types of Forex trading? 1

    Is this really the historical period on the stock market?

    Longest Bull Market in History? 

    Media reports that the US stock market broke the record for longevity on August 22, 2018. And some portals were ecstatic with this information and published articles about this ”historical record”.

    This would be quite a success if it is true. But, many experts claim it is not.

    The true fact is that the longest run belongs to the 12 1/2-year periods running from October 1987 through March 2000. The present bull market started in 2009, will need to wait till 2021 to beat that record.

    According to some media and experts, bull markets are rallies that go beyond 20 percent and are never interrupted by a 20 percent fall. By the rules of Wall Street, that means the S&P 500 rally that began in March 2009 will surpass all that went before it on Wednesday.

    Historical period on the stock market?

    ”It may be peaking”, said Jim Paulsen, chief investment strategist at Leuthold Group.

    Here’s the problem: the rules aren’t made from stone. They’re not laws and even they are, people make them. So, that means the rules are not perfect and they are changeable. The 20 percent threshold people understand as arbitrary, false, an creation, fake. Experts disagree on everything and that’s good.

    “If you round the data, you’re going to get a certain number of bull markets. If you don’t round, you’re going to get a different number,” Justin Walters, co-founder of Bespoke Investment Group LLC, said by phone. “If you want to do that, that’s fine, but it’s not using the standard 20 percent definition.”

    If you want to start a fight on Wall Street just ask how old the current bull market will be on Wednesday.

    “Hold the champagne! This is not the longest bull market on record or since WWII as the current buzz on the Street would have you believe,” wrote Jeff Hirsch, editor of the Stock Trader’s Almanac, in his blog post.
    As Hirsch’s post shows, that calculation doesn’t sit well with some analysts, though not always for the same cause.

    For instance, Sam Stovall, chief investment strategist at CFRA, noted objections that argue the current bull would have to run until April 3, 2021, to claim the crown. In this case, the rub doesn’t have to do with dating the start of the bull market back to March 2009. Instead, it hinges on the contention that the 1990s bull market actually ran longer than it is widely credited.

    What is historical here?

    ”Using Ned Davis rules the longest bull began on October 11, 1990, and ran for 2836 calendar days until July 17, 1998. The current bull that began on February 11, 2016, would have to run until November 17, 2023, to beat it.” wrote Hirsch.

    So what conclusion we can have if this bull may be younger than we think?

    What we should focus on is performance. If we take this is indeed the longest bull market in history, let’s focus on returns. Through that point of view, the current bull market has returned just over 320 percent, while the bull market of the 1990s gained nearly 420 percent. To break that record would really be an achievement worth celebrating.

    It is impossible to prevent anyone from celebrating or drink champagne, but do it when you have the real reason based on irrefutable facts.

    Till then: Markets go up, markets go down.

    Risk Disclosure (read carefully!)