How to control your Greed in a Bull Market and Gain Confidence in a Bear Market

1. How to control your Greed in a Bull Market and Gain How to control your Greed in a Bull Market and Gain Confidence in a Bear Marke Confidence in a Bear Market t? ? What are bu What are bull and bear markets? ll and bear markets? Bull market Bull market A bull market can be defined as an aggressive increase in stock prices and broad market indices over a period of time. There is a general uptrend that creates a lot of optimism and confidence among investors. A bull market can be caused by a variety of factors – a strong or fast-growing economy, GDP growth, reduced unemployment, better business performance, and rising corporate profits. A high demand to buy stocks leads to rising average prices of shares. During a bull market, naturally, investors are eager to buy securities because of the thriving economies, resulting in a buyer’s market. The most recent example of a bull run can be the market peaking at around 61,000 points (Sensex), right after its fatal crash of 4% in March 2020 due to the pandemic! Bear market Bear market Unlike a bull market, which has no clear definition, A bear market is defined as a period of several months or even years during which stock prices consistently fall. The onset of a bearish trend is officially recognised when the markets are down 20% or more for at least two months. Events such as natural disasters, pandemics, or even wars can push forward a bearish trend in the market. Bear markets can also be an economic trend in which the economy reels from stagnation or decline due to low confidence in the economy, high unemployment, reduced business operations, and meager profits.

2. A bear market can also indicate recession (extended period of negative growth). Investors here prefer to sell rather than buy into the market. As investors lose confidence, a selling spree is triggered in the markets. As the demand for stocks falls, the prices fall further. As a result, a seller’s market develops. How can you control greed in bull markets and gain confidence in bear markets How can you control greed in bull markets and gain confidence in bear markets? You can make wise investments in either a bull or bear market, but it all comes down to timing. If you can spot the market’s direction early enough, there are numerous opportunities to profit in either market. Here are a few tips you can keep in mind Here are a few tips you can keep in mind during bull and bear markets during bull and bear markets: Do Don’t rely on your emotions n’t rely on your emotions Stock markets are a game of emotions, and sometimes, an investor’s emotions of greed or fear can overpower rational thinking. Bull runs may compel investors to keep buying, while bear markets may compel them to sell, regardless of any rationale or analysis. Market attitudes can neither be controlled nor predicted. If your emotions and greed guide your investment activities, you are inviting a disaster for yourself. The most critical part of making a profit in the flux of the stock markets is not giving in to the public emotion that follows these changes. Taking a rational and realistic approach to investing is critical whether you want to capitalize on the euphoria or make the most of the market fears. Respond to the market with logic rather than emotions. Conduct a fundamental analysis Conduct a fundamental analysis Fundamental analysis can be defined as the process of viewing a stock holistically based on macro factors that include the economy, industry, sector, and company. Despite how the market sways, stocks that have strong fundamentals have the potential to withstand harsh falls and bounce back from them. Sure, they may experience volatility or undergo a downward trend during bear markets, but in the long run, they have known to remain stable and can generate wealth. Fundamentals stand strong even in the face of bear markets. So, conduct a proper fundamental analysis before investing, and then formulate your investment strategy. For instance, if you hold a fundamentally strong stock that, due to negative market sentiments, has fallen, then it would not be a wise decision to sell it. Selling in a bear phase and buying in a bull phase may not always earn returns. Read more about the difference betwe difference between bull and bear market en bull and bear market