In fact, two of the basic concepts of stock market trading are “bull” and “bear” markets. On the one hand, the term bull market is used to refer to a stock market in which the price of stocks is generally rising. Quite interestingly, there is no specific and universal metric used to identify a bull market. Nonetheless, perhaps the most common definition of a bull market is a situation in which stock prices rise by 20% or more from recent lows. On the other hand, a bear market exists when stock prices are overall declining in price. A bear market occurs when a market experiences prolonged price declines.It typically describes a condition in which securities prices fall 20% or more from recent highs.
In the context of the Nepali stock market, stock pundits often say that the Nepali stock market is more volatile than stable in nature. However, investors can still profit even in bear markets through short selling. Besides this, short selling is the practice of borrowing stock that the investor does not hold from a brokerage firm that does own shares of the stock. As I’m a long-term investor, I often buy stocks when the prices drop. And, of course, for that, I’ve read through the company’s fundamental and technical analysis so that I can better understand its good returns. On top of that, however, stock market analysts and investors may look at a variety of factors to indicate a stock’s probable future direction, up or down in price. For instance, a stock’s market capitalization, or market cap, is the total value of all the outstanding shares of the stock.
Strengthening Integrity of Stock Market
A higher market capitalization usually indicates a company that is more well-established and financially sound. Publicly traded companies are required by exchange regulatory bodies to regularly provide earnings reports.These reports, issued quarterly and annually, are carefully watched by market analysts as a good indicator of how well a company’s business is doing. Among the key factors analyzed from earnings reports are the company’s earnings per share (EPS), which reflects the company’s profits as divided among all of its outstanding shares of stock.
Apart from this, analysts and investors also frequently examine a number of financial ratios that are intended to indicate the financial stability, profitability, and growth potential of a publicly-traded company. As a result, studying these financial ratios such as the price to earnings (P/E) ratio, debt to equity ratio, return on equity (ROE) ratio, and profit marginwill make a huge difference when investing, whether the market is bull or bear.
