With the market near all time highs, I feel it necessary to discuss bull markets. A bull market is essentially a market that is continually increasing.
The bull market we are experiencing now is the second longest in history. It has lasted about eight years and has gained about 249%.
The longest bull market occurred from October 1990 to March 2003. In that period the stock market gained about 417%. Had you invested $1000 in the beginning, you would likely have about $5200 today. Our current bull market has surpassed the average length of 3 ½ years and is now near unprecedented levels.
There are a few different investments you could be in to take advantage of a bull market. Stocks in certain sectors typically do well during this type of environment. These sectors include financials, industrials, materials, technology, and consumer discretionary, to name a few.
Another type of investment is high yield bonds, or “junk bonds.” These do well because they represent debt in less stable companies and behave like as stock as a result.
There are two different types of markets, a bull market and a bear market. Each behaves differently and each has their own number of investments that perform well. To learn more about bear markets and what behaves well in them, visit my post here - Bear Markets.
One way to help reduce risk is to diversify. However keep in mind that diversification does not guarantee a profit or protection from losses in a declining market. To learn more about diversification visit my post about that here – Diversification. Next post I will be discussing the different types of sectors you can invest in.
The opinions and forecasts expressed are those of the author, and may not actually come to pass. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past performance does not guarantee future results.