A bullish investor is someone who invests with an expectation that stock prices will rise. Conversely, a bearish investor believes financial market conditions are not conducive to gains and therefore trades stocks accordingly.
An investor with bearish sentiment views increases in stock market value as an opportunity to sell stocks and exit the market. Bullish investors hunt opportunities to enter the stock market at bargain prices and ideally to be rewarded with future profits.
Investors can profit in both bullish and bearish market periods. When the stock market is expected to rise, bullish investors go long or buy stocks. Investors may also "short" a stock, which is to bet on its decline. Mostly, traders and institutional money managers including hedge funds participate in shorting stocks.
Bullish investors may eventually change over to the bearish camp. Meredith Whitney, a financial analyst with Meredith Whitney Advisory Group, is historically credited with calling bull runs in financial stocks and the broader markets. Her opinion soured in November 2009 when she suggested that stocks were rallying with little justification and that gains were not sustainable, according to CNBC.
Investors who want exposure to best-of-breed stocks should not wait until a bear market before entering the holding, according to Tom O'Halloran, a mutual fund manager at Lord Abbett, cited in SmartMoney. He says expensive stocks are appropriately priced during market rallies.
The American Association of Individual Investors (AAII) releases a weekly report that assigns a percentage value to bullish, bearish and neutral sentiment in the stock market for the forthcoming six-month period. Survey participants are members of the AAII.
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