Bull Market

What is a bull market?A bull market is when the stock market has risen significantly recently. This can occur anywhere from a few months to many years. It is usually accompanied by consistent profit growth by most big companies.

People get ecstatic about market has been going on for several years and they pushed higher by thinking that it will continue far into the future. This works very much the same, but opposite, way that a bear market works -- the more people buy, the more it pushes up the market, the more people want to buy, and so on.

Can the beginning and end be reliably predicted?

No. That doesn't stop people from trying and sometimes getting lucky and guessing right. However, no one has been able to do it consistently.

"What about the people that predicted bull or bear markets in the past?" you may ask. Again, they were lucky and if you follow them for a long period of time you will find them missing many other predictions.

What should I do when one arrives?

The prudent path is to continue with your investment plan regardless of whether the bull or bear market. Definitely do not buy because the market has gone up. If anything, scale back on the stock portion of your investments and by safer investments as the stock market rises. The more excited people get about the market, the less excited you should be about buying and the more excited you should be about selling.

It's easy to let your emotions take over when people of stocks are doubling in a week as happens frequently in the late 90s. Anytime you get too excited about a rising market think about the late 90s and how many people bought near the top and lost their shirts.

Follow the sage advice of: "Be fearful when others are greedy and greedy when others are fearful."

How will I know when its over?

You won't know until it's been over for at least six months -- well beyond the point of being able to sell out of your stocks. Don't try to predict when it will be over.

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