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What you need to know about corrections

Stock market correction happens when the market falls 10% or more from it recent peak. Correction can occur in securities or any other asset class. To knew investors this may come as a big surprise but corrections are natural part of market cycle that happen often and they can even strengthen the market. It is caused by certain events that triggers selling but market usually makes up loses in couple of months. Correction is not the same as the stock market crash. Correction happens when fall of 10% manifests itself over days, weeks or months while stock market crash happens when price drops by 10% in one single day. Stock market is one of the main indicators of economic health since buying and selling of securities is based on investors projections, whether they have positive or negative expectations of future market movements. Corrections don't last long, usually it is three or four months and they can happen more than once a year. They happen during expansion phase and i...

Risks and rewards of bull market

Bull market is market trend when price of assets or securities rise by 20%, an opposite from bear market. The term bull market is usually used when talking about securities but the term applies to anything that can be traded, real estate, currencies and commodities . During bull market all three major stock indexes, S&P 500, Nasdaq and Dow Jones Industrial Average rise. Bull market happens in healthy economy and is characterized by investor confidence and optimism. The term can be also applied to investors, ones that have optimistic view of the market is called bull or bullish. On the other hand investors with pessimistic view of the market are called bears or bearish. Natural rise and fall of economic growth over time is known as business cycle and it has four phases: expansion phase, peak, contraction and through. Bull market happens during expansion phase when economy is growing with strong GDP, with drop in unemployment and strong corporate profits. In stock market...

How to invest during bear market?

Bear market is defined as a market trend in which price of securities fall 20% or more from previous market peak and last two months or longer. Usually bear market is caused bu declining economic activity caused by a change in monetary policy. Recession is accompanied by low employment. Stock market crash, drop in stock price of 10% or more in just a day or two can cause bear market and negative investor sentiment. It can occur in any asset class, stocks, bonds, currencies and commodities or section of industry. In stocks bear market is measured by indexes like Dow Jones, S&P 500 and Nasdaq, if they are continuing to lower over period of time. Bear market can be recognized through observation of business cycles. It is the opposite of bull market or expansion phase when asset price continue to grow over time. sometimes corrections, less severe decline in price that lasts less than two months. Investors use different steps to protect themselves like increasing amount of cash...

How to become seasoned investor?

Many beginners in investing dream about getting rich and becoming a seasoned investors. It is not an easy task but it is not impossible. If you are serious about investing the first thing you need to do is stop dreaming about becoming rich and successful overnight. You probably heard it many times but that's because it true- patience is the key. You will have to learn how to think long term and not make hasty decisions that you will regret later. Another thing that you have to do before you start is to get to know yourself - what is your goal, what motivates you and also very important your fears and limitations. Knowing what you want will help you devise an investing plan and stick to it as well as knowing your limitation. So far it is a good start but it is not enough because you will have to educate yourself continually about investing, but don't let your lack of knowledge hold you back. Stock market is ever changing and learning about it is a lifelong journey so if...