The bull market is a market characterized by the rise in prices of goods and services. Investors take advantage of this market since prices continue to rise.
You can use this term in many markets such as stock market, currencies, bonds, real estate, etc. The bull market can last months or years depending on economic conditions and related factors.
During the bull market, investors and traders invest heavily in the market. They believe that the market will continue to grow for a long time. As a result, the market rally continues until the bear market kicks in.
What causes the bull market?
The strength of the economy is the main cause of the bull market and its length. Everything goes well when the economy is good. People invest more money when they are not afraid of losing. This optimism keeps the bull market alive and strong until something happens in the economy.
Some of the longest bull markets
Based on the Financial Industry Regulatory Authority (FINRA), the following are the longest bull markets since 1929.
- From June 1949 to April 1956
- From October 1974 to November 1980
- From August 1982 to August 1987
- From October 1987 to March 2000
- From March 2009 to Present
How to recognize a bull market?
There are many ways you can use to identify what the economy is doing. The following are a few of the many ways you can use to spot a bull market.
- The recovery of an economy: It is true that the economy does not crash forever. The end of the crash will mark the beginning of the recovery. If you see that an economy is recovering; get ready for a bull market to follow.
- Increase in manufacturing and retail data: Investors and traders recognize the extended growth from an increase in manufacturing and retail sales. When the spending spirits of people increase, they buy more. This increases sales in the retail industry. More retail sales lead to buying more products from the manufacturing industry which will increase their productivity and revenues. With more customers, the manufacturing sector will hire more people to cover the demand. As a result, the unemployment rate will be reduced. What do people do when they have jobs and are not worried about getting laid off? Well, they borrow and spend more money. This spending behavior strengthens the economy.
- Growth of tech and cyclical stocks: Tech and cyclical stocks grow from an increase in revenues and earnings. This increase happens only when people buy their goods and services. Therefore, tech and cyclical stocks can be used to predict the direction of the market.
- Low-interest rate: Low-interest rates attract more borrowers which in the end support every sector of the economy and creates more jobs.
How to invest in a bull market?
Since bull markets are a sign of extended growth, you can buy and hold your stocks for a long time. By using this strategy, you will take advantage of the entire market rally.
Those who are active in the market can buy and sell during the ups and downs as the market fluctuates in the uptrend.
