What does bull mean?？

Bull market can also be called "long market," refers to the financial markets and the economy showed a rise in the situation, most people will point the bull market to the stock market, but in addition to the stock market, the bull market is also applicable to bonds, real estate, currencies and commodities.。

In fact, there is no universal definition of a bull market, and the most common explanation is that a bull market represents a successful 20% rise between a 20% fall in the stock market and another 20% fall, but a bull market is not as immediately recognizable as a bear market, so most analysts also learn from the fact that the bull market phenomenon is already taking place.。

The difference is that bear markets usually fall quickly, but bull markets can last for months or even years, such as the recent bull market, which lasted 11 years from 2009 to 2020.

What is the bull trap?？

Bull market traps often occur in bear markets, its essence and the bull market has nothing to do with it, it refers to the short-term recovery in the bear market phase (usually in the first and second phases of the bear market), and break through the so-called "resistance point," so that investors mistakenly believe that this is the end of the bear market, the rise of the bull market;。

The U.S. SPX500 index shows that the stock market began to fall at the end of 2007 and rebounded in April 2008, but the bear market did not end and then continued to fall, and this brief rally is a typical "bull trap."。

What are the characteristics of a bull market?？

GDP rising

GDP refers to the GDP of a specific country or region in a specific period of time (usually one year), the higher the GDP, the better the economy, and vice versa。

And since the economy is doing well in a bull market, GDP will also rise, which means that people's consumption levels are rising, so more people will inject assets into the stock market, allowing the bull market to continue。

Corporate earnings boost

As the economy performs well, most companies' earnings will increase as well.。In a bull market, you can often see company earnings numbers showing earnings climbing, even far exceeding analysts' expectations, which is one of the characteristics of a bull market.。

Unemployment Rate Drops

The company's earnings increase and production capacity increases, so more human resources are needed to match the company's growth, so the overall unemployment rate will instead fall and the employment rate will increase.。

Increased investor confidence

Investor sentiment is easily influenced by the market, for example, most investors in a bear market are in a pessimistic mood, while in a bull market, most investors are confident and will show positive actions, such as opening leverage, short term and other operations, as if investing in any stock will rise.。

And market analysts can also fuel investor sentiment, as the economy is doing well and market and equity analysts often give positive analysis and reports, giving investors more confidence to buy stocks。

Causes of the Bull Market

There are three main reasons why a bull market can occur: economic, political and stock market。

At the economic level, when a company's earnings increase, market interest rates fall, inflation is moderate, and emerging industries flourish, it is possible to get the economy in a good direction and therefore allow the bull market to go smoothly.。

And at the political level, when the government introduces new policies or gives better preferential treatment to private companies, it is also likely to send the stock market into a bull market。

In the stock market, when analysts give a positive analysis, or well-known investors buy stocks in large quantities, or new IPOs continue to be issued, there will be a rush to buy the stock market and continue to drive the stock market up.。

The three cycles of the bull market

Phase I: Best Admission

A bull market usually occurs after the most severe bear market three, when the economy is just out of the trough, ready to rise, but few people can see it, so the bull market sentiment is still in the doldrums, and more far-sighted investors have seen the recovery scene, and began to gradually build positions。

Phase II: The Best Data

When more and more people find that the economy has returned to full steam and begin to inject capital, it means that the bull market has entered its second phase, and most people find that it is now in the critical period of the bull market.。

When the market is in the second phase of the bull market, the company's earnings will continue to improve, economic performance data (such as GDP) will get better and better, the unemployment rate will fall, these real data make everything look good, investors' desire and confidence will increase, so that stock prices and indices and other types of financial markets gradually rise。

In general, the second phase of the bull market is also the longest-lasting cycle of the entire bull market.。

Phase III: Most Frenzy

When the bull market enters the final third period, investor sentiment has shown a high state, there will be a lot of speculation such as open leverage and short-term operations, stock prices rise very sharply, many new IPOs will also quickly rush, when the investment market is blind, no one seems to pay attention to the risk of this thing。

When there is a bull market phase three, it is important to note whether the share price has exceeded its intrinsic value, as blind investing by investors can easily lead to the share price exceeding where the value lies。

And usually the third phase of the bull market is also a precursor to the stock market crash, so this time is not as long as the second phase can last, the stock market is likely to collapse at any time。

Three cases of bull market

Historically, bulls and bears are incompatible, and when a bear market occurs, it must be the decline and rise of some bull market.。

U.S. Stock Bull Market: 2009-2020

At the end of 2007, the U.S. subprime mortgage crisis, stock prices continued to fall for nearly a year and a half, after 2009 the stock market began to recover and lasted until 2020, is the 21st century so far the longest bull market, maintained for nearly 11 years, until the emergence of new coronary pneumonia in 2020 led to the collapse of U.S. stocks。

U.S. SPX500 Index Rising From 2009 to 2020, Bull Market Maintains for 11 Years。

U.S. Stock Bull Market: 1982-2000

The most prolific bull market in modern U.S. history is thought to have occurred between 1982 and 2000, during the 18-year period after the end of hyperinflation, the DJ30 had an average annual return of 15 percent, and the NASDAQ rose fivefold between 1995 and 2000, until the dot-com bubble was punctured.。

U.S. DJ30 rose from 1982 to 2000, and cattle grew for 18 years。

Hong Kong Stock Bull Market: 1987-1994

One of the longest bull markets in Hong Kong was between 1987 and 1994.。

As Hong Kong was able to benefit from mainland Chinese funds for the first time, the Hang Seng Index remained at 1900 in December 1987 and rose to around 11500 in 1994, a six-fold increase.。

How to invest in a bull market？

Keep buying and holding for the long term

Continue to buy and hold for a long time is the most basic investment method, but the difficult is not to buy, the difficult is to hold for a long time, to know that the stock price will fluctuate at any time, the investor's mood may also fluctuate, so to stay calm in the case of so many fluctuations and not drift with the flow, will be the patience to be honed under the long-term holding。

In a long bull market, as long as the company's fundamentals are healthy, the stock price will basically rise, so the first condition for investors to choose a target is to find a company with sound fundamentals, buy at the right price and hold it for the long term.。

When the share price exceeds intrinsic value, or when the company's policies and the original intention of the investment go against each other, you can consider selling your holdings, and during the bull market period, whether it is beyond value or policy influence or not, the result is likely to have brought you income.。

Correction plus code

Although the bull market is long, there may be several periods of correction over the years, both for the overall market and for individual stocks.。

There is no shortage of reasons for the correction due to short-lived factors, such as the worse-than-expected earnings this time, or short-term policy influences, but in the long run, this short-lived decline is actually a great opportunity for investors to get their hands on stocks。

If you've already bought the stock, this pullback is a good opportunity to continue buying at a cheaper price。

Underpinning this strategy is that as long as the bull market as a whole continues, fundamentally sound investment targets will continue to grow, which will also generate substantial returns for investors at that time.。