What You Need To Know About Bull Markets

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Stocks are an important entity in the corporate world. There is a rigorous competition between companies to acquire maximum stocks every day. The funds that are compatible with these stocks help the company fulfill its financial requirements. Discount brokers provide investment advice to old-timeinvestors at cheaper prices.

The top 10 stock brokers in India give precious financial advice to investors to help them make prudent decisions. It has been observed that stocks are used as a currency when a company is purchasing one of its competitors for expansion. The value of the company increases multiple folds when it acquires its struggling competitors. Once the company has assessed its rival’s strengths, assets, and future value, it signs a pre-planned agreement which can be rendered in stock.

The rival which is giving up its company has to leave the fate of their company in the purchasing company’s hands, especially if the deal is good enough to make up for losses. However, bull markets are considered as Diwali for the companies enlisted in the stock exchange, because everyone goes home happy.

Definition of a bull market-

  • Bull markets constitute of a favorable scenario where the prices of securities rise or are expected to rise. Along with stocks, and an upward trend in bonds, currencies, and commodities is also considered as a bull market.
  • The origin of the name ‘bull markets’ is similar to bear markets. The bull defends its attackers by thrusting its horns in the air. The rise in prices in the stock market a compared to the upward attacking technique of the bull.
  • Bull markets hold a lot of expectations, such as strong results for months or years, investor confidence, and a great amount of optimism. Predominantly, bull markets occur when prices increase by 20 percent after a drop of 20 percent and before a 20 percent decline. However, market trends can rapidly change, which is why bull markets are declared only when they happen.

Characteristics of bull markets-

  • Bull markets share shoulders with a strong economy. They occur with a strong gross domestic product, a drop in unemployment and a rise in corporate profits.
  • The environment of the stock market is optimistic and investor confidence take an all-time high. IPO activities increase in bull markets and impetus is given to buying rather than selling.
  • The event of supply and demand for securities will see-saw during a bull market. The supply will be less while the demand will be more. There will be a greater inclination towards buying rather than selling. The probability of profits and gains increases, especially when they invest before the market prices shoot up. When they sell the stocks during the peak times, they earn maximum profits. The bottom and peak of bull markets are undefined, but al losses incurred during that period are usually minimal and can be easily neglected.
  • The most promising bull markets occurred in American history after the stagflation era in 1982 and ended during the dotcom bust in 2000. This was a secular bull market that lasted for many years and led to immense profits for companies and investors alike.

 

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