You might have heard that bear market us bad and recession should not happen. From now, you will think different, and you will want bear market again and again.
What is Bull and Bear market?
There are two phases of any market, it can be real estate, stocks, gold and i.e., bull market and bear market. In bull market, price of everything goes up and up. Because of price went too high, bear market occurs and price of everything goes down, in peak of bull market, money’s power gets down and vice versa.
All about Bull market
Bull market lasts longer than bear market. And most people like to invest during that phase of market only. But remember, to become rich, invest in bear market, too and I will show you why. People hate end of bull market. But let’s see what happens in bull market. In bull market, everything is like fairy land. Everyone is making money, people are putting more money in market and government is printing pretty good amount of money, new companies get registered, new businesses start and people have money to spend because they are earning too. Because there is so much flow of money, everyone loves that. This becomes comfort zone of people, and this lasts long enough. End of this comfort zone is so bad. When these all processes get too much then things begin to get bad.
End of bull market is really bad. People hate it. Especially traders, because now stocks will be too much volatile and they can not track its movement. Things start to get worse in end of it. Government prints lot of money during bull market. This causes everyone have money and power of that currency goes down. So, inflation begins to raise. Price of each and every stuff increases.
End of bull market
With high inflation, everyone has to face its consequence. A good government can delay this phase for a good amount of time, but in the end, they have to do international trades, so it shortens this period. When inflation is high, companies do not make as much profit. To stay in profit, they lay off their employees and remove each possible liability. When Reserve bank of nation increases interest rates means now money in market will be available at higher price, Interest rates increase so it makes tough for people to pay off their loans. People can not pay their mortgage and they become homeless.
This is really tough time for people. This is when they are unemployed and homeless, and everything is so expensive as they can not even make their living. Rent of houses are high too so people decide to live on pathway. When they can’t increase interest rates further then they decide to print money and bear market occurs.
Bear market
End of bull market is really nice. Everything gets back on track and bull market begins. when bear market comes, government either prints lot of money or borrow money to lower interest rates that they were increased during inflation.
Even in recession, there is massive layoffs. People begin to sell their assets at lower price to get as much as possible money from it. Earlier they sell, then they get more money than people who sell it later. In bear market, people become homeless, too. People have lost their jobs and now they can not even sell their assets to get extra money. This is worse phase in nation’s economy.
We need both phases
When dust gets settled down and people begin to trust market then bear market ends. And bull market begins. Bull market is most beautiful phase and bear market is worse. You need to see both of them because there will not one without another. You should understand that this is how it is, there is nothing you can do to change it and you can not run away from it. You can delay it but longer delay will bring more chaos.