Bull market is the term describing the rise of securities, such as stocks, bonds, and commodities prices. The Bull market does not just happen, there are factors drive stock bull market.
The bull market happens in a period of time, usually until investors think that the price will keep climbing up. But inevitably the bubble burst and the price drop drastically.
If they fall for less than 20 percent, then there is a market correction.
Bull and Bear Market
In contrast to the bull market, the bear market happens when the price falls up to 20 percent. During that period the investors’ confidence falls resulting in the falling prices.
The Driven of Bull Market
The bull market usually happens in a healthy economy. There are three main causes of a stock bull market.
Top-line revenue
Top-line revenue increases as fast as the economy. This increasing revenue usually measured by the nominal gross domestic product (GDP). Increasing top-line revenue represents the high demand for goods and services from the customers.
Profit
Profit represents the amount of top revenue generated for the company. Many people assume that if the company earns a big profit than it is good. Yet, it is not. You have to remember that high profit comes at the expense of jobs, salary, and investment in capital.
Price per earning ratio
This is how much additional stock price that investors are willing to pay for every dollar of earning.
The History
The terms a bull and bear were used since the 1500s. That came from a bull and bear-baiting. During that baiting, people watch dogs attack bulls or bears that chained to a post. For this purpose, bulldogs were bred.
For every match spectators will bet on which will win the battle, is it the dog or the bull. In the 17th century, people usually said to a hunter, ‘Do not sell the bearskin before anyone caught the bear.” That represents short seller behavior in the stock market when the share prices drop.
Then, after that, what came to people’s minds as the opposite of a bear is bull. Thus, people use the term bull and bear to describe the market.
