Bull and bear market return vary. This may be attributed to the fact that the price-to-earnings ratios as well as the price-to-income also differ. The article below reveals certain facts of the bull and bear market return. Bulls may be referred to as the buyers and the market conditions during this period are regarded as good.
On the other hand, bears are referred to as the sellers and during this phase the market conditions are not so good and there is usually a slowdown in the economy of the country. In the year 2000, bull market (in USA) came to an end with the crash of NASDAQ.
The bull market trend had started way back in the year 1982. The economy started recuperating but not as high as the years prior 2000. As of now (March 2008), bear market is ruling, which returned a couple of months back with America’s sub prime mortgage crisis. That a bear market was on would not have been known had the Nasdaq Composite index not dropped by 20% from a high.
More over, unemployment rate is also increasing and this has made it very evident that a recession is underway. It has been observed that a bear market in the US lasts for approximately 17 years. However, the recent bear markets have had a shorter time span.
Returns from the bear and the bull market:
The Bull and bear market return differ widely. Unlike bull markets, which give high returns, the bear market returns get altered drastically. When a bear market is on, the valuation of the stocks gets altered. The reason being when a bull market is on(as in 2000), the price-to-earnings ratios may reach 45. This would be in sharp contrast to the bear market when the price-to-earnings ratios may be as low as 6 or 7.
For reasons similar, investments are not encouraged during a bear market phase, as the returns are not satisfactory. Even if returns are better, they are of little use as inflation may also gnaw away the returns earned. Some experts feel that even if a bear market is on and an individual invests for a longer time period, the returns may not be affected to that extent.