Investment, in the stock markets, requires buying an asset at some price and selling it later at a higher price to earn some profits. However, it is not necessary that the asset you invested in will definitely have a hike in its price. There are chances that the market may crash, and the prices may fall. However, a properly diversified and balanced portfolio may help you in facing the challenges of the market movements.
When the prices of securities in the stock markets rise faster when compared to the overall average rate, it is known as a bullish market or bull market. Bull markets are often accompanied by the periods of economic growth and optimism among investors. In case of a bullish market, the prices start falling rapidly. However, there are risks in both the market cases. The prime essence of investing is to make decisions under uncertainty and risk.
Making decisions in the market requires knowledge, discipline, research and focus. Let us discuss about some of the investment techniques which may help you prosper in the bullish market.
There are numerous opportunities in the bull markets for wealth creation with lower risks and therefore bullish phase of the market is considered to be the most ideal phase to take advantage of the rising prices. You can buy stocks at lower prices and sell them at higher price. There are great probabilities of earning profits in bullish markets. So, without further ado, let us discuss about each one of these techniques in detail and help you in finding out the best investment technique in bullish markets for your needs.
1. Long Positions:
Bullish markets are more beneficial if you invest in in long positions. This implies that you enter a position at a low price and hold the same. When the prices show a rise and are at a considerable level, you can exit the position and book profits. However, timing the markets is not easy and requires experience and knowledge.
2. Fundamental Research:
Fundamental research requires you to study about the fundamentals of various companies. A company with good fundamentals including sales, earnings etc. and which has a demonstrated history of growth is expected to show a good rise in the bullish market.
3. Exercising Call Options
Investing in call options can be amongst the best techniques to invest in a bullish market. When you invest in a call option, you buy a stock at a given specified price which is known as the strike price on a specified date. When the price of the stock moves beyond the strike price, you have the option of buying the stock at the lower price and selling it in the open market at the higher price, thus booking good profits.
4. Investing in Fallen Stocks
The bull markets are often preceded by a bearish market which provides various opportunities for bottom fishing. Bottom fishing is a strategy of buying stocks when the prices have bottomed out and keep them holding for a long term. Whenever there is a surge in the price in the bullish market phase, you can sell those holdings and book very good profits. However, choosing the right stocks is not an easy task and requires research. Market Neuron is one such product which can help you in choosing the right stocks for long term investing.
5. Diversification
Diversification is one of the most important techniques in almost every market segment and asset class. You cannot survive in the market unless you have diversified investments which are also in line with your risk profile analysis. You must always include stocks from different sectors in your portfolio. The portfolio should be properly balanced because an over diversified portfolio will never show results and will definitely end up in losses.
Conclusion
Bullish markets are often very lucrative for investors because they provide enormous opportunities for wealth creation, but you should always remember that risk prevails in bullish markets too. Any unplanned or hasty decision can lead to huge losses. Therefore, if you are not experienced or not sure about your decisions, it is better to trade with research-based recommendations from an investment advisor.
