o3 BLOG | investissements
Le marché haussier expliqué : tout ce que vous devriez savoir
For young investors, or people who are just starting out, it is essential to learn how to temper their expectations and grow their money, over the long term, to avoid possible financial losses. This means knowing the difference between a bear market and a bull market. Often seen as a decline in market conditions, a bear market is a time when there is a decline in assets and securities amid fears of divestment and rising prices. A bull market, however, is a little different.
A bull market in financial markets is a period in which the price of an asset or security increases continuously. A bull market is typically characterized by optimism, investor confidence and expectations, or a 20% rise in stock price following two successive 20% declines. Traders employ different strategies to take advantage of bull markets, such as increased long-term buying and retracement. Part of the difficulty is that it can be difficult to predict investors’ intentions and that speculation sometimes plays a large role in the markets.
The longest bull market in S&P 500 history began in March 2009 and ended abruptly in March 2020, overwhelmed by coronavirus fears. The current bull market started soon after. Either way, precious metals investors maintain strong long-term prospects. That’s why young investors should consider diversifying their portfolios with gold mining company stocks, exchange-traded funds (ETFs), and physical gold.
Bull market conditions
Although a bull market has no specific characteristics, it usually occurs when the economy is getting stronger or is already strong. Strong GDP and falling unemployment often coincide with rising corporate profits; this is when investor confidence is on the rise. For example, as we emerge from the COVID-19 pandemic, companies will begin to increase production of goods and commodities, which means a pick-up in aggregate demand for inventory.
With many opportunities, IPOs typically increase during bull markets. When supply is low and demand is high, investors rush to buy securities, while few sell them.
Bull or bear markets are part of an economic cycle with four phases: expansion, peak, contraction and trough. The start of a bull market is a key determinant of economic growth. It creates a wave of support for future economic conditions and measures that drive up stock prices and generate profits.
Being a bullish trader in a gold bull market
N’oublions pas que des principes fondamentaux déterminent les tendances pour les investisseurs qui cherchent à tirer leur épingle du jeu – un message clé à retenir pour l’avenir. Les investisseurs qui souhaitent profiter d’un marché haussier doivent acheter tôt, pour profiter de la hausse des prix, et vendre lorsqu’ils ont atteint leur sommet. Pour les investisseurs qui cherchent à diversifier leurs portefeuilles, investir dans les actions de sociétés minières aurifères est un bon moyen d’y parvenir.
En raison de leur levier d’exploitation, les actions aurifères ont historiquement le potentiel d’être plus performantes lorsque le prix de l’or augmente. Un prix de l’or plus élevé, surtout en cas de crise politique et économique, peut accroître les marges bénéficiaires et le flux de trésorerie disponible des sociétés d’exploration aurifères. De plus, lorsque le prix de l’or monte dans un marché haussier, les bénéfices d’une société minière pourraient croître. Comme les coûts de production augmentent un peu plus lentement, toute hausse du prix de l’or peut se répercuter directement sur le résultat net. Les sociétés minières aurifères majorent promptement les dividendes dans les marchés haussiers : les actionnaires peuvent ainsi réinvestir et accélérer le potentiel de croissance.
Why investing in gold stocks in a bull market is a good idea
Bull markets don’t last forever, so it’s important to invest in companies that take advantage of this period to strengthen their balance sheets, reward shareholders and reinvest in projects that will bring future value and returns. Dividend stocks traditionally increase dividends to reward shareholders, and gold mining company stocks continue to generate impressive results. Several of the top 10 gold mining companies have seen their earnings per share estimates nearly triple over the past 2 years, while the top 20 S&P 500 companies have seen their earnings per share estimates fall by around 15%. . In 2020, gold still outperformed just about every other asset class. Additionally, gold exploration companies offer even higher returns to people who are willing to handle the additional risk they present.
ETFs are also generally a good way to profit from a bull market; it is also possible to use short selling and retracement. If you want to be more aggressive in your investments, you can target a particular stock at the beginning of the trend and sell it when it has reached its growth peak. This is called the “buy low and sell high” strategy. However, if an up-and-coming junior gold mining stock piques your interest, you may want to consider holding it for the long haul as it can generate significant long-term profits.
What you must remember
Ultimately, the best investment strategy is a long-term one. Investing in stocks of gold mining companies can help you take advantage of this bull market period, which is expected to continue post-pandemic.
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