Stocks Basics: Bulls, Beers, Chickens & Pigs, Oh My!

If you aren’t familiar with the term the bulls and the bears nor do you understand why they are constantly at each other’s throats, you will have a better understanding once you start to invest in the Market.

Bulls

When the state of the economy is good, great even, it is referred to as a “bull market.” This term is applied when employment is good, stocks are rising and gross domestic product commonly known as GDP is also on the rise. Everything’s coming up roses! It is much easier to choose a stock during a bull market as everything is on the rise. However, a bull market will not last forever. In fact, if stocks become overvalued, this can lead to dangerous circumstances. A person who is continuously optimistic that stocks will continue to rise is referred to as a “bull” and posses a “bullish outlook.”

Bears

On the contrary, a “bear market” refers to a time when the economy is unstable, stock prices are unstable and falling, and there is the threat of a recession. It is not easy for investors to find a profitable stock during a bear market. One technique of making money during unstable conditions, especially making money when stocks are falling is referred to as “short-selling.” Investors also tend to wait on the sidelines until they suspect that the bear market is nearing a close and wait with anticipation of the forthcoming bull market. A person possessing negative, pessimistic attitudes is referred to a “bear” with a “bearish attitude.”

Chickens & Pigs: The Other Farm Animals

Chickens

The unsecure investors are referred as Chickens because they are unsecure and they usually afraid of losing. Their insecurity, in fact, overrides their need to succeed so they invest only in money-market securities or avoid trading altogether. It is true that you should never invest in anything that causes you to lose sleep, but then you will never profit if you completely avoid the market and don’t take any chances.

Pigs

High-risk investors are referred to as pigs and are trying to find that one big “score” as quickly as possible. Pigs invest on hot tips and companies without first giving them their “due diligence.” They tend to be over-emotional, greedy and impatient about their stocks and are often drawn to high-risk investments without taking time to do proper research. Since professional traders (the bulls and bears) profit from these losses, pigs are quite beloved amongst professional investors.

What Kind of Investor You Want to Be?

There are many different types of investment strategies and styles. Though at odds, bulls and bears both make money through the changing market cycles. Even chickens tend to see some returns. However, the one loser in this scenario is the pig.

It is important to not enter the market until you feel that you are 100% ready. Never invest into anything you are unsure about and remain conservative. Do not jump in without proper knowledge. Do your research so that you can able to make money either in Bull or in Bear conditions.