Things You Can Do When The Market Is Bullish

A bull market or a bull run refers to a stock market that is characterized by a sustained rise in share prices with most counters trending upwards.

Bull runs normally occur when investors believe the positive trend will continue for the long term.

Bull runs present an opportunity for investors to take advantage of rising prices by buying early in the trend and then selling when stocks have reached their peak.

At times, a company may simply be doing well and investors want a piece of the pie and they buy stocks and hang on tight to watch the money come in.

The supply of shares, then, is low no one wants to give up their piece of the pie.

The competition to acquire those much-coveted shares becomes fierce, which drives the prices up even higher. In such circumstances, the best strategy is to recognize the trend early and make smart buys.

This means that timing is of utmost importance.

However, knowing exactly when stocks are at the bottom or the peak is impossible but investors need to closely follow market reports, results releases and trading updates in order to get it right in terms of timing. The trick is in buying low and selling high.

As you start to add shares to your portfolio, first analyze your situation to make sure that you have diversification. Some shares are more aggressive choices than others.

This choice reflects your risk tolerance as well. Figure out whether you want to invest in a small-cap stock with phenomenal growth prospects (and commensurate risk) or a large-cap stock that’s a tried-and-true market leader.

 Look at industries that are poised to rebound as the economy picks up and individuals and organizations begin to spend again.

One of the most basic strategies in investing is the process of buying a particular security and holding onto it, potentially to sell it at a later date.

This strategy necessarily involves confidence on the part of the investor: why hold onto a security unless you expect its price to rise?

For this reason, the optimism that comes along with bull markets helps to fuel the buy and hold approach.

Evaluate your personal goals. No matter how good the market and the foreseeable prospects for growth are, stock investing is a personal matter that should serve your unique needs.

For example, how old are you, and how many years away is your retirement? All things being equal, a 35-year-old should have predominately growth stocks, while a 65-year-old requires a more proven, stable performance with large-cap market leaders.

For any investor, safety is as important as growth. Prudent risk management therefore requires that one addresses the possibility that a “Bull” market could turn “Bearish” at any time. One’s portfolio needs to be prepared should unfriendly market conditions occur.

For more detailed information you need to physically visit a stockbroker or any capital market participant for interaction about your Investment choice or decisions.

Have a wonderful day.

5 Technical Factors That Results In Stock Price Movement

Much of what is done in the stock market as well as whether we succeed or fail, depends largely on the movement in the prices of the stocks we have invested in. These movements are governed by a number of factors that could be fundamental or intrinsic to the stock itself, based on its environment, as well as a number of technical factors.

In today’s article, we will review the technical factors that govern price changes or cause price volatility.

These factors represent external conditions that alter the supply of and demand for a company's stock and a clear understanding of what they are will certainly help you make better decisions as an investor. They include:

1. Market Trends

A trend is simply referred to as the upward or downward movement of a stock's price over a period of time. Various trends govern the stock market; when there is an upward movement it is known as an uptrend and when it is downward over a period of time, it is said to be a downtrend.

They also cut across short-term, intermediate-term and long-term periods. These trends are usually created by a myriad of forces like Govt policies tends toward economy activities, monetary policy, foreign portfolio investment, speculation/expectation and even forces of supply and demand.

An example of a trend is where a stock keeps rising as its growth causes it to grow some more. This is the momentum effect. There are also circular trends that rotate after certain periods of time.

In order for you to gain from specific trends, you must move with it and not against it. However, because many trends govern the market, trying to predict the future with them will be a cumbersome activity.

2. Inflation Rate

The basic definition of inflation is that it is a sustained increase in the general price level of goods and services in an economy over a given period of time.

The most apparent influence of the inflation rate is what we all experience as citizens of a country and it is simply that when prices are higher, we have less money to purchase items. In other words, inflation indicates a decrease in the purchasing power of a nation's currency.

In the stock market, low inflation is known to drive high multiples and high inflation also drive low multiples. For clarity, multiples are used by investment bankers and financial analysts to determine how much investors are willing to pay per naira of earnings. Also, inflation makes you pay more for less as prices increase without a corresponding increase in value.

Dividend stocks are especially affected by inflation as income stock prices generally decline. When inflation is on the rise, prices are generally higher, you purchase less for your money’s worth, and profits also decline.

While you are not in control of inflation as an investor, it will do you good justice to adjust for inflation when projecting your expected gains. It will help you control your expectations.

3. Insider Information

The stock market moves based on information. How this information affects prices depends on a concept known as efficient market hypothesis and it basically refers to how asset prices reflect all available information.

Where this information is not public and known to only a few, those involved in it are inherently motivated by something else as opposed the intrinsic value of the stock. There are cases of executives making moves in the market like shorting specific stocks for what seems like no reason at all.

As a result of their effect on supply and demand, they affect the price and ultimately volatility of the stock market.

4. Demography Of The Market

Population is spread across a wide demography. As such, even the stock market is made up of different people who contribute to the sentiment of the market in a diverse range of ways.

And because demography is never constant, there are investment opportunities and risks associated with it. On one hand, you have the young and middle aged investors who actively invest for growth in the stock market and on the other hand, you have the older investors who now want to pull out their funds from the stock market in order to meet retirement needs.x

Where the market is primarily made up of middle-aged investors, then there will be more demand for stock investments and this will increase the multiples.

The prices in the stock market are determined by these factors and more. These forces which are often unpredictable explain why market volatility is the stock market is a norm.

Knowledge of them will help you understand why certain things happen in the market. With this information, you can employ necessary strategies to protect or enhance your investment portfolio.

Enjoy your day 😊.