What is a bull market?
What is a bull market?
It’s an investment term signalling an active trading market. Prices are rising. More people are buying stock.
It contrasts a “bear market”, which sees the opposite trend.
Bull markets are more strictly defined as extended periods of share price rises, contrasting them from individual days or weeks when markets experience a boost.
What is a bull market?
Investing experts will generally tell you that a bull market has the following traits:
- A continuous rise in the price of assets and securities.
- A 20% rise in stock prices.
- Specific investment strategies employed by traders to capitalise on the increase in prices.
What causes a bull market?
Bull markets form on the back of a strengthening economy. Several factors feed into it, such as a higher GDP, a reduction in unemployment, and a general increase in consumer and investor confidence.
If you see these signs, you may well be at the beginning of a bull market. GDP and employment are easy figures to measure; confidence is less so, but you’ll rarely be short of business journalism content to provide you with commentary on that.
What should boards and managers know about bull markets?
Investors
Generally speaking, corporate profits increase in bull markets. This can spell great news for your company, financial backers, and corporate future.
What’s important is to have a growth-oriented strategy in place so your firm can make the most of the highly active market.
Increased activity
First and foremost, both bull and bear markets govern investor behaviour. You are likely to see signature investing tactics surfacing in both. It’s your job to know how your company fits into this.
In bull markets, investors are on the hunt for shares that they believe will increase in price. For that reason, they will often buy and then hold what they have as their assets appreciate.
They will likely focus their attention on companies that profit most within the market, have clear governance structures in place, and have thorough growth strategies.
In summary
Bull markets are periods of growth, profit, and increasing share prices. Sometimes, they can last for years.
During bull markets, you’re likely to see growth in your business and perhaps increased attention from investors, but some of this depends on your corporate strategy.
