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Financial Markets Influences

Financial Markets influences are felt by all market participants: sometimes they impact the investment/ trade to be made on the day; otherwise they impact the valuation of the investment assets held. Short-term traders and long-term investors alike need to be aware of the influences on the markets to better decide on trades to make (or not make).

Who/ what influences the daily performance of financial markets?

Is it ‘the Bulls’, ‘the Bears’, or other factors?
What is a Bull; and what is a Bear, in financial market terms?

What defines a Bull Market, or a Bear Market?
Whether the Bulls are running or the Bears are roaring – the markets continue to operate: so should you be concerned about the state of the market at any time in your long-term planning?

Whether the Bulls are running or the Bears are roaring – the markets continue to operate: so should you be concerned about the state of the market at any time in your long-term planning?

Defining Bulls and Bears as financial markets influences

In financial markets –

  • a Bull is a positive investor: one with a view that the markets are improving and are yet to get better; their ‘glass is half full’;
  • Bears on the other hand take a pessimistic view of the markets and are certain that ‘doom and gloom’ will prevail: their ‘glass is half empty’. The stock market is said to be in a Bull/ Bear phase once it has taken a move upwards/ downwards of twenty percent.

A relatively recent experience (at time of original post of this article) saw us enter a Bear market early in 2008 following the start of the downturn in December 2007; and a Bull phase during April this year after ‘the bottom’ was struck around 9 March 2009.

Strategy also influences financial market outcomes

In any event, these are terms that are more significant to short-term traders in shares than they are for investors (who usually have a longer-term horizon). ‘Why is this so?’, you might ask.

As our clients are aware, we do not encourage ‘timing the market’ as regular entry and exit strategies – although there may arise occasions, when ‘topping up’ is happening, that we may adopt this approach.

For a principal investment strategy however, ‘time in the market’ is far more rewarding – and provides a greater opportunity to benefit from share market volatility.

Investing without fear of Bulls or Bears –

Using this tactic to establish an investment portfolio with a long-term outlook can be made over a number of tranches (instalments) that facilitate missing the highs and the lows of the market and, except where the market grows consistently throughout the installment period, is likely to result in an average entry cost more favourable than otherwise. This tactic is referred to as Dollar-Cost Averaging and helps to ‘even out’ the peaks and troughs generated by financial market influences during the implementation of an investment strategy – it is a process we have recommended in relevant circumstances for some time now.

How to invest confidently, without trader-type concern –

We encourage investors to take a strategic view of their investing and to largely ignore the title of the beast (the Bulls or the Bears) running at any particular time. To arrange a meeting with one of our experienced advisers to review your investment portfolio and the strategy governing its structure and asset allocation, phone the Continuum Financial Planners Pty Ltd office on this number; or use our website contact us facility at on our website.

Be comforted, that – ‘we listen, we understand; and we have solutions’ to your wealth management concerns: and we deliver them through personalised, professional wealth management advice.

(This article was originally posted in the November 2009 Client Newsletter: it has been occasionally refreshed/ updated, most recently during February 2020)1

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