The bear market and the bull market

As in many areas of life, there are always two opposite directions in the stock market. In this case it is the direction of the market, an up and down, so to speak. This means that the prices of the shares on the stock exchanges can rise or fall.

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Price movements in the markets should normally be based on fundamental company data.

Good company data, or at least positive prospects, usually lead to rising prices, while bad company data, on the other hand, lead to falling prices, at least according to the theory.

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If the macroeconomic environment is good, it is also very likely that a large number of companies will have positive business results. Theoretically, this leads to an overall increase in share prices over a longer period of time. In this phase one speaks of a bull market . Figuratively speaking, the bull drives prices up with his horns. The ever increasing share prices attract more and more new shareholders to the market. As a result, the media reports about the price increases, usually with a time lag, which in turn attracts new investors and gamblers to the stock exchanges. In this market phase, or one can also say that the market is bullish, the prices rise higher and higher and enable shareholders to make quite reasonable profits.

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In a recession, when all economic activity is in decline, it is also very likely that there will be more negative corporate news. Shrinking sales and profits of many corporations tend to cause prices and indices to fall. Then, once stock prices begin to fall, a bear market arises as investors tend to sell so as not to be left with losses. The bear hits the courses down with its paws. If the entire stock market or indices falls by more than ten to twenty percent, the phenomenon of the so-called bear market rally sets in. Securities are sold in a panic, which in turn leads to further price losses on the market. The bear market is thus gaining momentum.

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