how to benefit from a bull market
investors who want to benefit from a bull market should buy early to take advantage of rising prices and sell them when they ve reached their peak of course it is hard to determine when the bottom and peak will take place but most losses that result from missing the bottom or top will be minimal and usually temporary as they re erased by the onward march of prices below we ll explore several prominent strategies investors utilize during bull markets bear in mind that these strategies like all others involve some degree of risk one of the most basic strategies in investing is the process of buying a particular security and holding onto it with the idea of selling it at a later date when prices have moved higher this strategy necessarily involves confidence on the part of the investor for this reason the optimism that s a hallmark of bull markets helps to fuel the buy and hold approach increased buy and hold is a variation of the straightforward buy and hold strategy and it involves additional risk the premise behind this approach is that an investor will continue to add to their holdings in a particular security so long as that security continues to increase in price one common method for increasing a position involves buying an additional fixed quantity of shares with every pre determined increase in the stock price a retracement is a brief reversal in the general upward trend of a security s price even during a bull market it s unlikely that stock prices will only ascend rather there are likely to be short periods of time in which small dips occur even as the overall trend continues upward some investors watch for retracements within a bull market and buy the dip the thinking behind this strategy is that the price of the security in question will quickly move back up and the investor will have booked a discounted purchase price perhaps the most aggressive way of attempting to capitalize on a bull market is the process known as full swing trading investors employing this strategy use short selling and other techniques to attempt to squeeze out maximum gains as shifts occur within the context of a larger bull market examples of historic bull marketsthere have been several significant bull markets throughout history each with its own unique characteristics and drivers here are a few examples 3bull vs bear marketsthe opposite of a bull market is a bear market a bear market is characterized by falling prices and investor pessimism it s commonly believed that the use of bull and bear to describe markets comes from the way the two animals attack their opponents a bull thrusts its horns up into the air while a bear swipes its paws downward these actions signify the movement of a market if the trend is up it s a bull market if the trend is down it s a bear market bull and bear markets often coincide with the economic cycle which consists of four phases expansion peak contraction and trough the onset of a bull market is often a leading indicator of economic expansion because public sentiment about future economic conditions drives stock prices the market frequently rises even before broader economic measures such as gross domestic product gdp growth begin to tick up likewise bear markets usually set in before economic contraction takes hold a look back at u s recessions reveals that a falling stock market usually comes several months ahead of gdp decline 