Ride It : Bull Or Bear?

Bear and Bull, if noticed, are both exceedingly dangerous animals and can create serious danger to humans, therefore they are the symbols of market trends!

ANIMALS IN THIS FARM:

Bear: Bear is when economy is hibernating. Historians say that the markets were named on the behaviour of the two animals. Bear, when attacking it's enemy, strikes with its paws, bringing them down. Therefore, Bear when the markets go down. A pessimist expecting markets to fall is also called a Bear.

Bull: Bull is when everything is rosy; there is strong and consistent economic gowth, market sees a rally; & unemployment - what??

A bull, when attacking his enemy, thrusts his head upward to inflict maximum damage. Thus, Up aggressive market trend is Bullish trend; and anyone going long is a Bull.

Pig: These are investors that are looking for their one big shot, ASAP. They are aggressive, impatient, impulsive and restless. They want to be rich without worrying about the homework or risk; They are traders' fave!

Chicken: Self-explanatory! They chicken out of the risk and adventure of Stock Market and choose Money-markets. They might not gain much, but they will not lose sleep or get slaughtered like the Pig!

Badger: As popularized by famous investor Michael A Gayed. I reckon he invites them to the farm because they are hunters, fierce animals, they dig (do their homework), and capable of fighting larger animals like dog-packs, wolves, bears, even Lions.

Market trends, on the other hand, are only Bullish and Bearish. 

When Bullish, 

1. One must find their Love; commonly known as Blue Chips. But never forget that just like your Summer Love or any other Love, these are NOT permanent. 
2. Perform your due diligence and wait till you find your Love. 
3. DIVERSIFY, pay attention. Never take Markets for granted (Stock Market is a Bad Girl)
4. Have a Stop-Loss Technique. This is a directive to sell stocks at a particular Market Price to avoid any kind of losses. For example, when market opinion about a certain stock’s maximum potential price is $45. Have a Stop Loss nearby, as when the stock reaches $44, there shall be a mass selling, resulting in plummeting of stock prices.
5. Asset Allocation: 100 Minus your Age Rule. There are, in general, 2 kinds of investments: Equity and Debt. The rule is you invest 100 minus your age in Equities with the rest going to debt. So, If I am 24, I should have 100-24=  76% in Equities.

One may think that if the markets are bearish, how can one make profits? So, WHAT TO DO IN A BEAR MARKET:

How do you ride a Bear? Same way as you ride the Bull, in the direction it is going!

1. Buy Low, Sell High:
   An adventurous investor, will make the most of this loss-making market trend. One can buy cheap now and wait for the markets to rebound; instead of selling off everything now because you are a Chicken (if you are, then you should invest in FDs; because for you not making a decision is a good decision!).
   For example, Satyam share prices dropped due to the very infamous Satyam Scandal to Rs 11 in Jan 2009, which resulted in all it's investors rub their hands off this particular stock.
   But imagine someone shelling out (not a big amount so he doesn't have to repent) in this not-so-enthralling moment of Stock Market, and would purchase 400 shares of the same at Rs 11 at it's all-time low?
   Winner! Because in 6 months the stock was trading at Rs 100 and out of Rs 4400, he earned Rs 40,000.
2. Ride this Bear out. Trading through the ups and downs scours away the long-term gains.
3. Short-selling.

And no matter what market trend, always be a Top Dog (another member in the farm)!