Who Knows what will Happen Next?

All these factors cause changes How early can I sell this Precon condo? in the market. But what about the long-term trends? The Fed is the country’s central bank. No one really knows the exact origin of the terms “bull” and “bear” to describe the stock market, but their meaning is clear. Learn about bull and bear markets next. The Federal Reserve System, usually referred to as “the Fed,” fulfills various duties related to the financial system of the United States.

As you saw with inflation and interest rates, when a company reports lower profits, investors lose confidence in the company and sell their stock, which decreases the value of the stock. Electricity and natural gas keep us warm, cook our food and keep our computers happy. When gas prices are high, however, some people look to alternative methods of transportation — carpools, public transportation, bikes, etc. Others keep paying the high price but, as a result, buy fewer consumer goods. Energy Prices: People always need energy. Therefore, the demand for energy is pretty constant. Oil Prices: People almost always need oil, in the form of gasoline. Only major changes in energy costs have a significant effect on the stock market.

The most important thing to know about these terms is that they describe long-term trends, not short-term changes. Unemployment is low. Consumers are spending money, which increases business profits. The supply of shares, then, is low — no one wants to give up their piece of the widget pie. The competition to acquire those much-coveted shares becomes fierce, which drives the prices up even higher. The economy tends to be strong. When businesses profit, investors demand to share a piece of the pie — they buy stocks and hang on tight to watch the money roll in. Bull and bear markets are usually measured in years. In a bull market, investors are positive. A bull market is a rising market.

After all, $5 is a lot of money to spend on a candy bar. When companies don’t make money, investors lose confidence in those companies. When this happens to many companies in the stock market, the stock market experiences a downward shift. Many investors sell their stock because they believe the stock is worth less and is only going to decrease in price. As the demand for the stock decreases, the price of the stock decreases. When consumers spend less, companies don’t make as much money.

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