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Showing posts from October, 2022

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.

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