The Smart Investors

A bull market is characterised by dramatic rise in prices of equities on the stock exchange. It normally coincides with the period of high economic growth. Rising income during economic growth encourages more people (old and new investors) to buy more shares. Prices keep skyrocketing beyond their intrinsic values, ushering in the bull market.

Companies also pay high dividends because they are declaring huge profits when the economy is growing. High dividend payout stimulates demand for shares, thereby propelling share prices into the stratosphere. The stock market index rises by 20% or more. The upward trend usually continues until there is a bust leading to a bear market- stock prices keep going down.

Strategies for investing in a bull market

1. Do not commit too much resources to the stock market
Spread your resources across stock, bonds, real estate and money market instruments. This allows you to spread your risk. In case the stock market crashes after the bull run, your diversification would cushion the effect.

2. Always invest for the long haul
Investing in equities should be long term. You should wait for some time to get your returns. It is not a "get rich quickly" scheme. Buying for quick gains in the stock market is speculation, not investing. It may be rewarding in the short term but the returns are subject to fluctuations.

3. Do not time the market
Nobody has the crystal ball! You cannot guess the direction of the stock market accurately. You cannot guess when a bull market will end. Some people keep buying thinking prices will continue to rise for a few months or years. You know what? They get 'burnt'

4. Beware of the so-called experts
A lot of experts spring up during a bull market because of the widespread interest in stock. Some will tell you when the bull market will end. If you hold a diversified portfolio of stocks over a long time after doing your due diligence, you will even out the year-to-year fluctuations in returns. You will even do better than the so-called experts or professionals. Do not be surprised that professional money managers lose money most of the time. You can do better by using simple simple proven strategies.

That's a very good explanation! I will also add that it's necessary to be careful during the bull market so as not to be swept up in hype.

TheSmartInvestor wrote: Mon Aug 18, 2025 5:44 pm That's a very good explanation! I will also add that it's necessary to be careful during the bull market so as not to be swept up in hype.

Dollar-cost averaging is also very important so you do not purchase everything at inflated pricing.

Greed is responsible for the huge losses many investors incur during a bull market. That is why they keep buying when the stocks are grossly overvalued. To succeed in the stock market, investors have to learn how to control their emotions first. The other emotion that makes people lose opportunity in the market is fear. Being too fearful makes the investor to hesitate when he should be buying.