The Deer Market – Going Nowhere Fast

by Investing School on September 8, 2011

While just about everyone has heard the terms bull or bear market, deer market is less commonly recognized. Continuing the theme of animal relationships, where the bull market goes upwards in the direction of a bull goring or the bear market moving down like the swipe of the bear’s paw, the deer market goes nowhere.

Why? Have you ever seen a deer which has been caught in the headlights? Even if you haven’t, the expression is familiar. The deer freezes.

Also called a flat or sideways market, the deer market indicates a period in which there really is no trend either upwards or downwards. Securities remain at a fairly constant price during this time.

Flat markets may be indicators of uncertainty. It may be the result of investors waiting to hear quarterly reports or other information. Sometimes it happens when trading volume is low, as might occur just before a holiday period. Recently stocks have remained flat each time investors waited for the Federal Open Market Committee report. Since this news can dramatically affect the way the financial world operates, sales are held until after the report is made public.

Are there any real advantages to a deer market? It is probably preferable to see a deer market than a bear market when you are heavily invested in securities. This is especially true if your stocks are paying good dividends during this period. Another consideration is that flat markets can be a good time to pick up new investments. Often those who rush to buy during drops watch their investments lose value before they start making their way back up.

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