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What is a Bull Market in Stock and Shares?

A Bull market is when Stock Markets increase in value over a sustained period. You often hear people talk about a Bull Market or a Bear Market, and these are similar but opposite terms. A Bull Market is when Sock Market prices increase by around 20% or more over a sustained period. This can happen when the economy is growing strongly. A recent Bull Market occurred after the Global Financial Crisis in the late 2000s. Low interest rates and other government stimulus caused stocks to grow continuously for an extended period. But why is it called a Bull Market? When Bulls attack with there horns they swipe upwards. This compares to the Stock Market moving upwards in a Bull Market. You can see a Bull statues famously on Wall Street in New York, but other financial institutions also use them. They are typically seen as a symbol of good economic performance.
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What is a Bear Market in Stock and Shares?

A Bear market is when Stock Markets decline in value over a sustained period. You often hear people talk about a Bull Market or a Bear Market, and these are similar but opposite terms. A Bear Market is when Sock Market prices decline by around 20% or more over a sustained period. This can happen when there are problems with an economy, perhaps during a recession. The Global Financial Crisis of the late 2000s or the .com bubble bursting in the early 2000s are examples of this. But why is it called a Bear Market? Well when a bear attacks you it swipes downwards with it paws. So the bear attacking downwards reflects the Stock Market heading downwards. This is of course the opposite of a Bull Market, where a bull attacks upwards with its horns!

What are Government and Corporate Bonds?

Bonds are a way for a Government or a Company to borrow money from Investors. If a Government or a Company needs to borrow large amounts of money they can sell Bonds. These are basically IOUs that you receive interest on. If you buy a 2 year Bond, at the end of the 2 years they will give you all your money back, and also some Interest on top to encourage you to lend them the money. So image your neighbour Suzy wants to expand her growing Lemonade business. She wants to open a new shop and buy some more equipment. Instead of going to a Bank or other lender, she decides to sell some Bonds to her neighbours. She thinks she will need to borrow the money for 1 year before she can earn enough to pay it all back, and she will need to raise £10,000. So she creates 10 Bonds, each worth £1,000 and she promises to pay you an extra £100 per year to make it worth your while. This means that that the Bonds have a 10% Yield (£100 is 10% of £1000 per year). You trust Suzy and have seen her business gr

What is Inflation?

Inflation means that the things you buy were cheaper yesterday than they are today. Prices for everything, such as food, clothes, cars and holidays tend to go up year after year. This is called Inflation. If something was cheaper yesterday than it is today, then this is Inflation. The amount they go up by over a year is the Inflation Rate. So if your favourite breakfast cereal is 10% more expensive today than it was this time last year, then the Inflation Rate is 10%. So to understand what causes inflation let's look at my neighbour Suzy’s Lemonade Stand again .  Suzy makes excellent Lemonade and that is because she buys amazing lemons from Leroy, our local lemon farmer. For months Suzy has paid Leroy £5 for a bucket of lemons each day. Leroy has a bit of a problem though. Everybody wants his lemons, but there is a big shortage of skilled Lemon pickers. To get the people he needs he must start offering higher pay. To find the extra money to cover these costs he decides to rai

Why do Share prices go up and down?

  Shares are bought and sold on a Stock Market, and just like any market, prices can move around quite a lot. Imagine you are shopping for some of your favourite apples at the local Fruit Market. But sadly lots of other people like these apples too. The savvy Fruit Trader knows how delicious they are and realises he will have lots of buyers today, so he sets a high price. The first 5 sell out very quickly so he increases the price for the rest, pushing the price higher. This is the same for Shares. Through research or ‘gut feeling’ people will decide if they want to buy a particular apple Share. If they feel someone is selling them cheaply then they will buy them, pushing the price higher. If they think the particular Share looks expensive they will choose to buy something else, leaving the Trader to lower the price of his Shares so he can sell them. It is very difficult to work out what a Share is worth as there are many different things that can impact a price. This is why Shar

What is Dividend Yield?

This is just a simple way to compare how large of a Dividend one company is paying compared to another. An example of a Dividend Yield is if the Bitesized Money Inc share price was £100 and they paid a yearly £3 dividend, then the Dividend Yield would be 3% (£3 is 3% of £100). The higher this percentage, the higher the Dividend return you will get on your investment (a 4% Yield would pay £4 per £100 for example). You don’t have to do this maths yourself though as any decent trading platform will do this for you. As an example, looking a Barclays Bank stock on Google Finance ( Barclays ), you can see at the time of writing it states “Dividend Yield – 3.77%”. So in simple terms, for every £100 of Barclays stock you own, they will give you £3.77 in cash this year.

What are Dividends in Stocks and Shares?

A Dividend is simply a profit share. If you own Shares in a company, and the company is profitable, typically once a year they will transfer some money into your account, this is called a Dividend. This Dividend is your share of the company’s profits, and you can withdraw and spend it however you wish. Let’s imagine your neighbour Suzy wants to open a Lemonade Stand. She needs some investment to buy lemons, so being a shrewd investor, you offer to give her £100 in exchange for half her company (the Shares) and half of any profit she makes (the Dividend). Suzy has a busy week and sells lots of Lemonade, after buying enough Lemons for next week she is left with £20 of profit. She gives you £10 (the Dividend) and she keeps the other £10. You still own half her company, and you will keep receiving half of the profits every week. In large companies the Directors may decide not to pay all their profits in Dividends, instead choosing to reinvest to buy new machinery, or grow the business. B