We’ve all seen the bull on Wall Street, and the concept certainly does match its namesake in aggression. A bull market is an aggressive market simply because it is such an attractive one. For those who are in the know, a bull market can be incredibly lucrative. But what is a bull market? And how does one successfully conquer it?
We’ve compiled these top tips to help you build your portfolio today and conquer the stock market.
5 WAYS TO TAKE ADVANTAGE OF A BULL MARKET
- Identify a Bull Market
- Develop the Right Backbone
- Create a Strategy
- Timing is Everything
- Continue to Research
Not to be confused with a bear market which is marked by record lows and shaky instability, a bull market is the exact opposite, a time when conditions are prime for buying and investing. A bull market isn’t for the faint of heart, so it’s important to approach your investments with patience, knowledge, and a little bit of guts. Remember, big risk can equal a big reward, but you have to be willing to take the jump.
There are certain strategies that both novice and experienced investors can use to bolster their portfolio’s performance during a bull market. A bull market is driven by rising prices and economic expansion, so it’s important to strike before prices inevitably fall. There are certain characteristics specifically related to bull markets that can help you make the right investment decisions – at the right time.
Let’s take a closer look at the key factors driving top investors during a bull market.
1. Identify a Bull Market
When prices are on the rise, it makes for the perfect buyer’s market, therefore creating a bull market. Bull markets are most commonly associated with the stock market, but they actually relate to anything that can be traded, including a group of securities like bonds, real estate, precious metals, currencies, and commodities.
A bull market is signified by prices either on an upward trend, or with the expectation to rise, and it is typically identified by increases of 20% or more above the national average.
Some strategies during a bull market include:
- Increased buy and hold – a strategy solely dependent on growth; if the holdings fail to promote growth, then the investor no longer has reason to keep them.
- Long positions are used to stand the test of time. They’re purchased at low, affordable rates, known as the strike price, with the expectation that they will develop and grow over time.
It can be incredibly difficult to identify a bull market in real-time. However, bull markets are often named by analysts after the fact, making it challenging to successfully conquer the bull market while it is occurring. This is why it’s more important than ever to develop the confidence and knowledge to successfully conquer a bull market. Knowing the characteristics of a bull market helps you to know when to strike.
2. Develop the Right Backbone
When comparing a bull market to a bear market, it always comes down to profit margins versus losses. A bullish trend can quickly overturn, and it takes a savvy investor to stay ahead of the often-unpredictable market. And while incredibly lucrative, of course, there’s a catch: A bull market can’t be all reward. Instead, it’s largely based upon timing, research, and experience, but there is no doubt that a bullish market is not for the faint of heart.
As John Tobey wrote, “Accept that a bear market’s moves can seem inexplicable. Their cause is unclear because there is only a hint of some future fundamental reversal coming that could affect the economy and/or general stock market.”
To conquer a bullish market, you must have a backbone and be willing to take a risk. The recent great recession may remain fresh in the minds of wary investors, but even the most conservative investor can engage in a bull market’s profits.
Amazon, Microsoft, and Apple all have historically proven to be top performers, giving more novice or conservative investors a pretty safe starting point. A broad index fund is also a safer option with less risk; experts report that while it may not perform as well as other options, it will still deliver gains in a less nerve-wracking format.
Don’t forget – what goes up must come back down, so use caution when determining how much of your money to put on the line. Utilizing key investment tips and strategies is part in parcel with a strong, top-performing portfolio. The right strategy will reward you handsomely, but you have to be willing to take the opportunity and cultivate it.
3. Create a Strategy
Before making any investments, you should begin by taking a closer look at their portfolio in order to determine how to restructure it into a top performer. There are several strategies you can take, and the best is highly disputed amongst experts. Truly, it comes down to these main strategies:
- Strike now for the immediate cash-in, or settle in and buy for the long haul.
- Investors are best served by creating a strategy and sticking to it.
To buy and hold is to maintain a purchase for an extended period of time. A long position is purchased with the intention of being a long-term holding, which could be incredibly lucrative and is most commonly recommended by experts and analysts.
Increased buy and hold ramps things up another notch in the world of investing, based upon the philosophy that greater risk brings greater rewards. One popular method of increased buy and hold is to regularly purchase shares based on a predetermined formula of growth and price. A call option is a similarly attractive option, but it is far more restrictive with its timeline for both buying and selling. These approaches demand a more active role in trading, as opposed to the more hands-off approach of other investment styles.
Swing trading presents a more temporary form of investing, as it is a quick buy and sell model. Lasting from overnight to a few weeks, ownership is temporary in order to make quick gains. It’s a risky strategy, however, because it solely depends on one’s ability to accurately identify short-term price momentum and pounce before the opportunity passes.
Prices will rise and dip, but such fluctuations are normal, with long-term growth taking both time and patience. It may be tempting to go for the easy option that pays generous dividends, but that doesn’t mean that that particular investment will stand the test of time as well as others.
There’s much to be gained from a long-term strategy. There are top investment strategies that can help grow your portfolio through the use of a self-directed IRA or through new investment goals in honor of the new year.
Be strategic in your selection for your portfolio. Choose companies that will survive the test of time, recession-proof companies like health companies or toiletry manufacturers. Even during times of crisis, people still require medical care and things like toilet paper. It’s a safe way to approach Standard & Poor’s 500 stock index, experts say.
Treasury Vault is an excellent place to start for strategy formation. Arming yourself with the right strategy for your short-term and long-term goals will enable you to successfully grow your financial portfolio.
This is where timing becomes important…
4. Timing is Everything
Like a marathon, financial investing is a slow win – one that requires endurance and experience to stand the test of time during a bull market. When you approach investing, particularly during a bull market, proper timing is imperative in order to successfully buy and sell at the most opportune times. A slow uphill climb, investing often requires you to commit to the long haul. Flash gains are rare and hard to come by.
A bull market is a marker of a thriving economy, most often the result of strong gross domestic product and low unemployment. When America is working and producing, the economy, in turn, is solid. As more and more people take notice and advantage of the prime conditions for investment, confidence creates a natural demand within the market, creating new growth and record highs.
Bull markets are known to be most profitable in the beginning, because it can be so difficult to pinpoint, and people are slow to identify it. But for those who have the right financial positions at the right time, it can be incredibly profitable.
A bull market is driven by the trend of high demand and low supply, so knowing when and how to strike is an invaluable asset to your financial portfolio. Bull markets generally pertain to long periods of consistent economic growth. Quite simply, it takes time to identify and is not an overnight process by any means. Stock prices are constantly fluctuating, so time is needed in order to flush out false gains and establish a long-term, legitimate pattern of economic growth.
One key indicator that a bull market is in its final gasps is when the Federal Reserve hits the breaks with serious surges on interest tax to try to even out the market. Even then, however, there is retracement, periods when stock prices dip low before rising back up again. Savvy investors know to wait for these periods, as it offers a temporary reprieve from otherwise healthy prices. One must act quickly, but it can be an incredibly lucrative opportunity to enhance and grow your portfolio during a hot streak. It’s a long game, with bull markets lasting months to years at a time.
5. Continue to Research
An important part of investing is research. Risk within the financial market comes from its sheer unpredictability, but there are still measures that can be taken in order to stay ahead of the curve. In order to know what moves to make, you must keep yourself educated and abreast of daily, even hourly developments if that’s what it takes. The economic cycle is perpetual, and the market can change in a heartbeat–especially from shifts in political power and monetary policy–so it’s crucial that an investment strategist knows when to adapt and when to stay the course.
When it comes to investing, knowledge is key–and that comes from regular research and continuing education. A bull market is always prone to fall to a bear market due to a change in investor sentiment, so staying on top of key trends and expert analysis can make all the difference with your returns.
Taking Advantage of a Bull Market
Bull markets can be so profitable because they are so unpredictable, and you don’t want to be another victim of the inevitable bear market when the bull market crashes and bottoms out. It’s always a cyclical process. This can be only applied through continued education, research, trend analysis, and counseling by a proven market strategist. It’s a task made easier from today’s digital age and its technological enhancements.
Technology today has ushered in the help of many new devices, programs, and apps, all designed to help you better understand and react to a superfluous financial market. However, it requires both knowledge and an overall confidence in the market because you’re trusting the market to be kind to your investments. This, however, drives the demand to create and maintain a bull market. Let’s face it: There are just certain stocks that perform better than others.
Experts noted earlier this year that there are average increases of 30.3% for technology stocks, 14% for industrial companies, and 12.5% for energy companies. Utility companies, on the other hand, performed among the worst. Your dollar would perhaps be best served with these options under a more secular, or longer-lasting, bull market.
History has also demonstrated that 1929’s record-breaking year marked one of the most significant bull markets in history, along with 1990, 2000, and 2007. Things will ebb and flow, but the key is being able to adapt to the ever-changing trends so you can stay on top and ride the wave to financial success. Constant education and research of bull and bear markets will enable you to learn from the past, so you are better able to profit from the future. Treasury Vault will be here to keep you informed every step of the way.