Bob Brinker's Marketimer

  Thursday June 25, 2009

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Investing during Bull Markets

Photo of a Shadow of a Bull on Stock Quotes

A key to successful investing during a bull market is to take advantage of the rising prices. For most, this means buying securities early, watching them rise in value, and then selling them when they reach a high. However, as simple as it sounds, this practice involves timing the market. Since no one knows exactly when the market will begin its climb or reach its peak, virtually no one can time the market perfectly. Often investors attempt to buy securities as they demonstrate a strong and steady rise and sell them as the market begins a strong move downward.

Portfolios with larger percentages of stocks can work well when the market is moving upward. Investors who believe in watching the market will buy and sell accordingly to change their portfolios.

Speculators and risk-takers can fare relatively well in bull markets. They believe they can make profits from rising prices, so they buy stocks, options, futures, and currencies they believe will gain value. Growth is what most bull investors seek.

A market characterized by rising prices. Also called an expansion period, a strong market, or an up market. The bull market is the opposite of the bear market.
An investment document that a corporation, government, or other organization issues as proof of debt or equity. Also, the debt or equity itself.
Waiting until a security's price is sufficiently low before buying it, or waiting to sell when its price is sufficiently high. The idea is to reap the highest profit possible. Many brokers watch market trends to alert their customers to when they believe it is most advantageous to buy or sell. Some investors avoid trying to time the market and instead place a fixed amount of money into an investment at regular intervals.
A place where buyers and sellers make transactions. Sometimes the term also refers to the specific demand for an investment, such as in the stock market or the commodity market.
The total investments of an individual or company.
Portion of a company's capital owned by a party and represented by the number of shares possessed. Stock represents equity in a company. There are many types of stock--for example, blue-chip, common, preferred, and growth.
An investor who is willing to assume risk in the hope of making a big profit. A speculator anticipates a rise in the price of a given investment high enough that he can profit, or low enough that he can sell short. Speculators frequently use margin trading, options trading, and many other devices that can potentially create large returns in little time.
Revenue left after all expenses--labor, materials, overhead, etc.--are paid. Profit is one of the principal motivations behind investing and business.
Permission to buy or sell a security at a specific price within a specific time. Most options granted are for puts and calls.
An agreement giving the holder the right to receive a commodity at a specified price at a future date. Since speculators in futures usually sell their positions in the contracts before the contracts expire, the commodities themselves rarely change hands.
Paper money.
Gains in value. In business, growth is measured by the expansion of assets and sales. In securities, it refers to the increase in market prices.
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