Investors in the stock market are familiar with animals indicating the mood of the market. Two animals in particular give a very important reflection of how markets are reacting at any given time. The first is the Bull. If we are in a “bull market” the economy and markets are moving along well. It’s how we’d like things to be because during bull markets people get jobs, the gross domestic product (GDP) is moving upward and stocks too are on the rise. When it comes to selecting stocks during a bull market it is easy, because everything seems to be increasing so it’s hard to go wrong. Unfortunately, as the proverbial, “what goes up must come down” the same is true with bull markets: they never last forever. In fact, when they start to go on for long periods of time it is possible for some stocks to become overvalued and that can turn dangerous. For those of you who are optimistic about the market and believe stocks will rise in value, you are referred to as a “bull” and to have a “bullish outlook.”
The other animal that reflects the mood of the market is the bear. Unlike its bovine cousin, this animal indicates that things are bad. Could be a recession is coming and stock prices drop. It is difficult to pick which stock will be successful because so many are doing so poorly. There is an alternative during these cycles called “short selling,” where you can use the downward trend of the market to make money. The other thing you can do to make money is to anticipate the end of the bear market and buying up stock just before it builds back into a bull market. But both of these systems contain risk, though should you do it correctly you can make a great deal of money. Those who fear the down turn in the markets are called, “bears” and typically have a “bearish outlook” toward the economy.