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Bulls vs. Bears

Are you a Bull or a Bear? If you are a sports fan you may think I am talking about either of the professional sports teams in Chicago, but you would be wrong! What I am actually referring to is the type of investor you are when it comes to investing in the financial markets. For those of you that don’t know, the financial markets are classed as being either a bear market or a bull market, depending on the current economic state. A bear market occurs when there is a steady decline in the stock market and investors are less confident about future prospects of stocks causing their prices to continue declining. A bull market occurs when the opposite is happening, investor optimism and confidence would be high and the stock market in general would be on an incline/resurgence with prices steadily rising.

At this current moment the world financial markets are definitely in what can be classed as a bear market, as stock prices are low and investor confidence is at an all-time low. This of course is because of the global recession that we are currently facing, which appears as If it will remain this way for the near future. Investors are really suffering because of this, as all but the sharpest and most diligent investors have pulled out of the markets and have turned to saving. This lack of confidence in the markets has spread to include prospective investors, some who have never even traded stocks before, many of them are busy looking for alternative methods of investing so than can make their money grow. The trouble with this is that the percentages currently being offered as a return on investment are so low that most end up leaving their money with their banks as the interest rates are often similar to what is being offered alternatively.

Now this is not to say that there is no money to be made in the financial markets, as there are still many investors making excellent returns daily! In fact some investors would tell you that investing now while the market is ‘bearish’ is a very smart move, which makes sense if you think about it. You see at the moment stock prices are really low and now would be the perfect time to capitalise on it. Say for instance you were looking for a long term investment; all you would have to do is research some into established companies that have relatively low stock prices, once you are satisfied that you have found the right company, purchase some of their stocks and wait. The key here is patience, as your stock might drop below the value you initially paid for it but rest assured that once we get out of this recession and the stocks start performing normally, you should make some significant profit! I can’t stress enough how important being patient is within a bear market, as the best returns can be had by keeping hold of stock that successfully makes the transition from a bear to a bull market.

This however is not the only way to make money in a bear market. A prospective investor can also start doing financial spread betting with one of the leading companies, such as Cantor Index by short selling to make profit on their investments during a bear market. This would be where you make a short term prediction/bet as to the way in which a stock/market will go, for example you can bet that a particular stock will continue falling in price and if it does you will make money however if it rises you stand to lose more than you bet initially.

Bulls vs. Bears

Here are three tips to help you be successful in the stock market;

1. Research; The most important factor, you have to do thorough research before investing. Make sure you have sufficient knowledge of the markets before risking any of your money.

2. Split up your investments. Do not attempt to use all your investment funds to purchase one stock, as you might have predicted wrong, and your investment can become worthless quickly. Many positive returns from many small investments are better than no return from one investment.

3. Try not to sell unless necessary. Keep hold of stocks as long as you financially can whether they are performing or not. Try to set cut-off limits, so that you will have predetermined the level of profit or loss that you would be comfortable leaving the market with.

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Date:
May 21, 2012 um 5:20 am
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Personal Finance
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