Low interest rates to high inflation to lack of jobs to high tangible-asset prices are compelling many of us to invest in the capital market. Some of us may be investing in the share market to diversify our savings portfolio. It is good for an individual as well as for the society if many more people invest in the share market. However, one must know that there are risks associated with the rewards. Do your research on micro and macro economy, business environment, growth prospects in different business areas, financials of a company before you start investing. Start your journey by demystifying two popular jargons.

What is a bull market?

In the jargon of stock-market traders, a bull is someone who buys securities or commodities in the expectation of a price rise, or someone whose actions make such a price rise happen. The term 'bull' originally meant a speculative purchase in the expectation that stock prices would rise; the term was later applied to the person making such purchases.

Price corrections are common during bull markets — they are viewed as painful, but normal, because they can puncture speculative bubbles like the run-up in dotcom stocks two decades ago. They also give investors a chance to buy stocks at lower prices.  

What is a bear market?

A bear is the opposite of a bull in the jargon of stock market traders. A bear is someone who sells securities or commodities in expectation of a price decline. The bear sold a borrowed stock with a delivery date specified in the future. This was done with the expectation that stock prices would go down and the stock could be bought back at the lower price, with the difference from the selling price kept as profit.  A bear market differs from a bull market "correction" in its severity.  Bear markets are rare, occurring on average about once a decade. They also often — though not always — foreshadow a recession. The two worst bear markets (America) in history — during the Great Depression (1929) and the Great Recession (2008)— produced cumulative losses of 83% and 51%, respectively. World suffers as and when the American market sees a downturn.