Introduction
Bull market refers to the financial market condition where stock prices are rising (by 20% or more) or expected to rise over a sustained time because of increased demand, optimism and confident among investors.
Key Features Of Bull Market
* Prices of stocks or assets rise
* It boosts investors confidence
* Because of high trading volume market activities increase
* It lowers unemployment rate
Pros Of Bull Market
The main advantages or benefits of bull market can be pointed out as follows:
1. High Returns Potential
Bull market helps investors to grow wealth because rising prices of stocks increase the value of their investment.
2. Increased Investors Confidence And Optimism
Another notable advantage of bull market is that it creates favorable trading environment that increases confidence and optimism among investors.
3. Easier Entry For Beginners
It attracts new investors because of rising market. Bull market encourages beginners to start investing and learn about trading.
4. Easy To Raise Capital
Companies can raise capital by issuing new shares at premium prices that helps the business to fund expansion, innovation, research and development etc.
5. Economic Growth
Bull market helps in business expansion that improves productivity, creates job opportunity and increases consumer spending. So, it plays significant role in the economic growth of the country.
Cons Of Bull Market
The main drawbacks or disadvantages of bull marker are as follows:
1. Risk Of Overvaluation Of Stocks
One of the major risks of bull market is that stocks may become overvalued because of rapid prices rise. So, it may create asset bubbles or market crash.
2. Difficult For New Investors
As we know that stock prices rise during bull market , it may become difficult for beginners and small investors to enter the market/
3. Increased Volatility
Bull markets are volatile in nature that makes stock prices unpredictable.
4. Fear Of Missing Out (FOMO)
It may encourage new investors to buy stocks at peak prices (right before downturn) . So, there is a risk of loss if market turns.
