Mad Rich

The market trends in the stock market are basically segregated into various categories. The trends are of two types – the primary market trends and the secondary market trends. The primary market trends are further subdivided into two types – the bull market and the bear market.

Types of primary market trends

A bull market is the classical stock exchange market. People think that the prices of stock would increase and they would be benefited by dividends received. Due to this optimism, people buy stocks. The bull markets were very famous in the 1990s. It was during this period that the economy of the United States and some other countries increased at unbelievable rates. An opposite scene exists in the bear market. Here, the investors are pessimistic. They are desperate and searching for people willing to buy their plunging stock. Thus, a bear is an investor who expects the share to decrease. A good example of this sort of scene is the Great Depression of 1930s. There is no official definition to conclude that a particular market is a bear market. However, investors assume that a 20% decline in a key stock market index means that the market is a bear one.

Long term investments

In the previous century, the stock market in the US had increased at an average of 11%. This appealed to the reader as the economy in the previous century was continuously growing. This growth may sometimes be slow and sometimes fast. However, growth has not been stopped. Bear funds have a problem that they are against a historical fact. Thus, if an investor desires to input money in bear funds as a long term investment, then this would not result in earning money. As a matter of fact, the investor would lose money. The reason is that it is not possible to be against the tide of the national economy. Due to this fact, bear market funds are thought to be short term mutual funds or short term bond funds. If one desires to earn money by investing in them, then it must be done for determined periods of time.

Examples

There are several companies that have specialized in the bear market mutual funds. However, a small amount of them are successful. Amongst the successful companies is Prudent Bear. This is managed by David W. Tice & Associates. This fund offers a solution for investors who desire to safeguard themselves when the market declines. Another company is Potomac Funds. This provides the Dollar Bear Fund.

A third company is called as ProFunds which has its own financial product called Bear ProFound. This fund searches results whose performances are opposite to the standard & Poor (S&P) 500 indexes. This company tells its potential investors regarding the risks that accompany this sort of investment.

Bear market mutual funds are not for all people. Only those who have an expertise of how the stock market works may venture into the bear funds. For this a lot of homework is essential. After doing research, those who feel confident that their money will gain from this investment can try going in for bear market mutual funds.