Bull Market
This situation is defined as a marketplace whereby the prices of listed securities continuously rise due to favorable macroeconomic scenarios or improved internal circumstances of the firm or sector. In general, the terminology applies to stocks, but it also gets referenced to other asset class such as Bonds, FOREX, and Commodities, etc. Since the laws of demand and supply influence the market, prices in financial markets will increase when the supply of stock falls and vice-versa.
Bear Market
Such a situation depicts a downward trend in the market over some time. The markets have a pessimistic approach, and the prices of assets are either in decline or expected to fall in the immediate future. It will cost investors a lot of money as security prices fall across the board, and investor confidence is also expected to hit
Key Differences
- The market is mentioned as bulls when the overall market scenario is positive and the market performance is on the rise. A bearish market is when the performance of the market is on the decline.
- IPO activities are encouraged in a bullish market since the market sentiments are positive, and investors are willing to invest more money. However, in a bearish market, IPOs are avoided since investments would not be encouraged, and people will prefer to hold on to the existing positions and liquidity.
- In a bullish market, the yields on securities and dividends will be low, highlighting the financial strength of the investor and the security others can receive on the investment made, whereas, in a bearish market, these yields shall be very high, indicating the requirement of funds and attempting to lure investors by offering higher yields on securities at a later date.