Are you looking for what is sometimes referred to as the “ bullish definition ”? When it comes to stocks, there are bulls and bears. A bull market refers to a market that is moving up. Likewise, a bullish investor refers to someone who believes that markets are going to go up, and thus invests accordingly. Meanwhile, a bear market is a market that is sinking, and suffering a lot of turbulence. A bearish investor, as you have probably guessed, is a person who believes that markets are going to sink. Confused? Don’t worry, we’ll define bullish and bearish.
So when you hear that John Smith for the Acme Fund is “bullish” on crude oil, that basically means he’s optimistic that crude oil prices are going to go up. This is basically the meaning of bullish. Most likely, he’s also invested some funds into crude oil. Meanwhile, if Jane Doe from Acme Holdings is bearish on the stock market, she’s pessimistic, and most likely, has started to liquidate her stocks, or otherwise prepare for a downturn, such by buying options.
Thus, the definition of bullish is the belief that markets will increase. Meanwhile, the definition of bearish is that markets sink. A bear market, meanwhile is one where the bears, or skeptics, are causing markets to sink. A bull market means more people are optimistic and markets are on the rise.
Investing in bull markets
If you’re wondering how to invest and what the bullish meaning of markets actually means, think of it this way, you’d only buy stocks if you though the price was going to go up. The same is true of futures or commodities. As we will discuss later, buying isn’t the only way to invest and you can make money off bearish markets (you can actually sell things you don’t own, but more on that later).
Anyways, back to bull markets. Most purchases are being made by “bullish” investors. They are picking up stocks or commodities or whatever precisely because they believe that prices are going to climb in the near future. If you are feeling bullish, in other words you believe that markets will rise, and you should expand your portfolio and start buying up stocks and other assets.
Investing during bear markets
Sometimes, investors think of bull as “buy” and bear as sell. Did you know, however, that you can make a lot of money during bear markets? Where there are movements in prices, there is most likely a way to produce profits. You just have to be on the right side of the movement.
When you are investing, you can “short sell” something. This basically means that you can borrow stocks or another asset from someone, and then sell them. Then, if prices drop, you can buy the stocks at a lower price and repay the person the stocks that they let you borrow.
In other words, instead of buying low and selling high, you sell high and buy low! Short selling offers you a way to make money off of bear markets. Other methods can also allow you to make money off of bearish markets, such as buying options.
Short selling stocks, however, is very risk so make sure you keep this in mind. Let’s say you short sell 10 Acme Computer stocks, which currently cost $100 dollars. Then, Acme Computers announces an extraordinary breakthrough. Stocks suddenly jump to $1000 dollars a piece. Now, you owe whoever loaned you the stocks $10,000 dollars, even though you only invested $1,000!
Markets go up, markets go down
Markets rise and fall. They always have and they always will. One thing to remember is to not get terrified the second a market turns bearish. If you find yourself in a bear market you need to ask yourself if it is because the market is suffering temporary turbulence or if it is because markets are about to suffer some very major losses. Perhaps a financial crisis is unfolding or a depression is setting in.
If markets are going to implode, you need to turn bearish, and you need to get the heck out. Of course, you should do your research before jumping to this conclusion. Sell your stocks, sell whatever your commodities are that aren’t recession proof. Buy things are are recession proof, for example gold often goes up, or short sell stocks.
Meanwhile, if you believe that markets are going to go up and you’re feeling bullish, you should look into expanding your holdings. This might even mean borrowing money through leverage, but always remember that when you borrow, risks increase. Either way, bull markets are the time to invest, but remember just because you feel one way, it doesn’t mean everyone feels that way. You can be a bull, but if everyone else is a bear, markets will sink!