Explanation:The sustained increase in the market prices is the result of increased investor confidence. As investors trust the market, they massively buy more shares, thereby trusting the financial markets with their money. As the gains grow higher, investor confidence rises as well. Investor expectations about the economy also affect the stock market. If investors trust their government, they invest their money in the stock market, causing the stock prices to rise. Furthermore, investors actively participate in a bull market by seeking to take advantage of market opportunities and earn a higher return relative to the risk they have accepted.
Example:The characteristics of this aggressive and optimistic market vary at any given time period, but, overall a bull market occurs as a result of rising investor confidence. Investor sentiment plays a fundamental role in how investors perceive the economy and the market and what prospects they have. Rising investor confidence leads to gains in the major indexes, including the S&P 500, and the Dow Jones Industrial Average, causing a momentum in the market.
In a nutshell:
- A bull market is a period of time in financial markets when the price of an asset or security rises continuously.
- The commonly accepted definition of a bull market is when stock prices rise by 20% after two declines of 20% each.
- Traders employ a variety of strategies, such as increased buy and hold and retracement, to profit off bull markets.