What is the meaning of Bull, Bear and Sideways and Investment Strategies?
In general, the stock market is classified into two types: upward and downward. Alternatively known as the bull market, the down market, or the bear market. Furthermore, there is another market that does not move significantly up or down and has no distinct adjustment direction. We’ll refer to it as a sideways market. The bull, bear and sideways are so named by the market because of their fighting posture. When bullfights, it will gore up. as in the skyrocketing stock price. While battling, the bear will use its hand to paw down. as in the case of the falling stock price.
If the stock market is bullish, all other elements, such as economic circumstances and the profitability of listed firms, will appear to be favourable. Investors are confident in their investments, and there is a high amount of stock activity. In contrast, if it is a bear situation, it will be the period when the “economic slump” fundamentals and the era when investors begin to become “unconfident.” The stock market is highly volatile. Furthermore, the government’s strategy on stock market stimulation may be ambiguous.
And how can we know if we are in a bull or bear market?
The state of the stock market will mirror the state of the product’s market. If the market scenario is favourable, the stock market will thrive; nevertheless, there are several indicators that the stock market is in a thriving period.
- Good economy: firm and varied business investment growth, the interest rate are at a level that is favourable for investment, high exports, lucrative business operators The state has made appropriate facilities available to businesses. Foreign investors put a lot of money into the country.
- Peaceful political scenario in both home and foreign policy.
- Stock market projections are positive.
- Foreign stock market circumstances are generally favourable. The Dow Jones (US) stock index, the Nikkei stock index (Japan), the Hang Seng stock index (Hong Kong), Danang shares, and the Straits Times (Singapore) are all significant stock markets that reflect the world economy.
If the stock market has gained in the manner described above, one should think that the market is in an uptrend. Which is the best investment term? Investors must, nevertheless, continue to evaluate numerous elements and always complete them before investing.
The market, on the other side, is slow, sometimes known as a bear market. The following factors indicate that the stock price index has declined or is on a continuous downward trend.
- The country’s economic status is bleak. Investment in the business is limited. Trade market conditions are sluggish. Profits have been diminished due to the performance of numerous enterprises. Many industrial investment projects must be postponed or cancelled because of foreign investment.
- The stock market outlook is bleak. Shares are not appealing to investors. Investing money in secure assets or bank deposits, on the other hand. As a result, trade conditions are deteriorating.
- Foreign stock markets are often lower as well. Investors might observe this by looking at the index of major international equities. Because investment in overseas markets will have some impact on the Thai stock market.
If there is a bull market, we may use our investment method to invest in high-risk assets. However, investors must exercise caution when it comes to price chasing. Making it feasible to purchase equities that are more costly than their actual value. As a result, examine the fundamentals of stocks. It is also something that investors should consider.
If there is a bear market, investors should hold more cash than riskier assets. Wait until the market has recovered to assess the issue. Which is a technique aimed at avoiding loss. However, there is one intriguing approach for investing in equities during a bad market: Value Stock. Which is an investment strategy centred on investing in companies where investors feel the stock price is lower than the underlying value. By examining accounting values or financial ratios such as book value, share price, profit per share, Price-to-Earnings Ratios, share percentage, Price-to-Book Ratios, or Dividend Yields. In a sluggish market, if the investor has frequently studied the investment stocks, there may be a chance for you to acquire excellent quality stocks at a reasonable price.
Investors should pick firms that expand even when economic conditions are not favourable for their investment plan in the Sideways market. For example, the firm operates in an industry that is expected to develop in the future. Even if the economic conditions are “poor,” the company’s performance is solid and not erratic, making it a “defensive” investment. As a result, we must select high-quality stocks. Because quality ensures that the organisation will be able to overcome challenges. And once the impediments are removed, they will soon flourish anew. Furthermore, we should select stocks that provide high dividend yields. Because this payment will lessen the danger that we will be harmed by a downturn in the stock market. The return on dividends is critical in investing. Because when the market is not performing well or there is no trend, Dividends may account for more than 90% of total returns. And, regardless of the market, valuation for individual stock selection will provide investors with a higher return than the market.
Frequently Asked Questions
Which investing strategy would you use based on your age?
The usual rule of thumb is that you can invest more aggressively when you are younger, and then become more conservative as you become older. The closer you go to retirement, the less time you have to deal with downturns or bad investments. Any of the investment techniques outlined here can be carried out aggressively or cautiously, depending on your preferences.
Why is it vital to invest?
Because of the nature of inflation, investing is critical. Your cash now may not be worth as much in a year, and it will be worth much less in 30 years. If you don’t have an investing plan that can at least outperform the rate of inflation, you’re wasting money.