Trading of stock is usually driven by short-term speculation regarding the business operations, products, services, etc.. It is this speculation which influences an investor’s decision to purchase or tesla sentiment sell and what costs are appealing.
The business raises money during the primary industry. This is the Initial Public Offering (IPO). Thereafter the stock is traded in the secondary market (what we call the stock exchange ) when individual investors or traders buy and sell the stocks to each other. The business is not involved in any profit or loss from this secondary market.
Technology and the Web have made the stock market available to the mainstream public. Computers have made investing in the stock market very easy. Market and business news is available almost anywhere on earth. The world wide web has brought a huge new group of investors to the stock market and this group continues to grow every year.
Bull Market – Bear Market
Anybody that has been following the stock market or watching TV news is probably familiar with the terms Bull Market and Bear Market. What do they imply?
A bull market is defined by steadily increasing prices. The economy is flourishing and companies are usually making a profit. Most investors believe that this trend will continue for a while. By contrast a bear market is one where prices are falling. The economy is probably at a decrease and several organizations are experiencing difficulties. Now the investors are pessimistic about the future profitability of the stock exchange. Since investors’ attitudes often drive their willingness to purchase or sell these tendencies normally perpetuate themselves until significant external events intervene to cause a change of opinion.
In a bull market the investor hopes to buy early and maintain the stock until it’s reached it’s large. Obviously predicting the low and high is hopeless. Because most investors are”bullish” they make more money in the rising bull market. They are willing to spend more money as the inventory is rising and realize more profit.
Investing in a bear market provides the best chance of losses since the tendency in downward and there is no end in sight. An investment strategy in this case might be short selling. Short selling is selling a stock that you don’t own. You can make arrangements with your agent to get this done. You will in effect be borrowing shares from your broker to market from the hope of purchasing them back later when the cost has dropped. You will profit from the difference in the two prices. Another strategy for a bear market will be buying defensive stocks. These are stocks like utility companies that aren’t influenced by the industry downturn or businesses that sell their merchandise during all economic conditions.