Does Bull Market Mean Good News?

by Investing School on May 9, 2011

For new investors the strange language used in financial circles can be quite confusing. Simply put, a bull market is one that indicates investor confidence. The increased confidence is usually displayed by an increase in investing, with investors anticipating higher future price increases.

A bull market is often viewed as a sign of economic improvement even before it is seen in other sectors of the financial world, and therefore it is one of the indicators which are closely monitored during a recession. Most commonly used to describe the activity of the stock markets, the term may be applied to any traded commodity.

If you find it hard to remember which is which, the term bull or bear market is connected to the way each animal attacks. A bull will attack by tossing its horns up into the air while a bear swipes downwards with his paws.

Unfortunately for investors, there is often no connection between real world events and the direction the markets seem to be heading. A bull market is the result of optimism that strong, positive movement will continue to occur on the trading floor. Speculation and enthusiasm may play a larger part in driving prices up than actual facts.

The best time to invest is just as a market is turning from a bear market to a bull market. The ability to time this right is the real challenge. Even the most seasoned investors get caught short time and again. The volatility of stock markets around the world is what makes short term investment such a gamble.

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