What is a bears market?A bears market is classified as 2 consecutive down quarters. Basically it occurs when the majority of stocks are going down. The bears market gets its name from the animal the bear. When it attacks it swops its claws downward.
Many investors with their buy and hold strategies come to hate this markets. Traders will be indifferent. They will see it as necessary correction. They will simply adjust their strategy to take advantage of the downside. There are a number of ways in which a stock trader can make money in a bulls market. The first and easiest to do is shorting. When you short a stock you are betting that it will go down. You do this by selling the stock now and buying it back later. Other traders will take advantage of more complex strategies such as buying a put or selling calls. There are still many ways to make money in a bears market. In fact many traders will actually prefer to be bearish on the market. These market bears believe that money can come faster in a by playing the downside then it will come in by playing the upside. This is because stocks have a tendency to go down faster then they go up. Fear is the main reason for this. A bears market is a natural occurrence that will happen once every few years. It will normally last somewhere around 18 month. This is not to say it will not last longer, or shorter. Some may only last 3 month while others could last 3 years. This market is full of bottom pickers. It is said that as soon as people start to believe we are in a recession the bottom has already formed. No one can really predict where the bottom will occur. But many will try.
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