In the wild, you probably won’t find bulls and bears interacting with each other. But when it comes to the stock market, it’s a whole other story. These beasts are always poised to take position … metaphorically, that is.
Market conditions are typically described as either “bull” or “bear” depending on the long-term directional movement of the market. When prices are on the rise (and are expected to continue growing) and investor sentiment is high, we’re experiencing a bull market. But when prices take a dip, typically 20% or more from recent highs, and investor confidence is generally low across the board, we may be looking at a bear market.
These trends often play out over several months or years, and changes aren’t always easy to predict. But as an investor, it’s important to be aware which type of market you’re looking at, as these conditions may affect which securities you want to invest in and what strategies you take.
So, take a look at the following fictional scenarios and see if you can pinpoint which type of markets they describe, whether it’s a bull, bear, or a correction (a shorter-term dip in prices, not as severe as a bear).