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| Bull and Bear
Markets: Ups and Downs |
| Two terms that you hear tossed around a lot
by financial experts are "bull" and "bear" markets.
A bull market is when stock values keeps rising, or are expected
to rise. That's easy enough to remember—think of a bull charging
ahead, just like the stock market. |
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A bear market is when the value of stocks is falling or is
expected to fall. The term is commonly used during periods
of recession or economic slowdown. Most economists define
the start of a bear market when there has been two consecutive
quarters of decline in a country's gross domestic product.
Like a bear going into hibernation, investors during this
period tend to seek shelter by reducing their exposure to
risky investments such as stocks.
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So how long do bull and bear markets last? It depends.
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| From 2000 to 2002 we were in a bear market,
which was, in part, caused by the Dot.com crash. Then from 2003
to 2007 we went through a bull market, though it was fairly tepid
bull market in comparison to those in more recent memory. And
then everything came crashing down in 2007 with the subprime
mortgage mess. |
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| During these periods of upturns and downturns,
you also may get sudden market drops. For instance, the Dow Jones
Industrial Average (the Dow), a stock index some people like to
equate with the stock market as a whole, once lost nearly a quarter
of its value in just one day-Oct. 19, 1987. More recently, the stock
market took a breathtaking plunge on May 6, 2010 when the Dow plummeted
by 1,000 points within a half-hour period. That slide (now referred to
as the Flash Crash) was most likely triggered by a computerized
trading error |
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