While most well - known investors boast impressive stock market
returns during bull markets, they show their true colors when the market takes a steep and steady decline.
It may be stating the obvious, but small - cap stocks and related exchange traded funds perform
well during bull markets.
There is no certainty in trying to base your financial policy on buying at low levels during bear markets and selling at high
levels during bull markets.
That is liquidity, and as such most risky assets do not have significant liquidity, though many trade every
day during bull markets.
Using the same methodology, you would have achieved phenomenal risk - adjusted capital appreciation
during the bull market portions of each bull - bear stock cycle.
Just like that phrase cited above about past performance, diversification is another lesson that many investors seemingly
forget during bull markets.
A frequent criticism of low volatility exchange - traded funds is that these funds leave some upside on the
table during bull markets.
In summary, evidence indicates that a high level of investor
sentiment during a bull market may be a useful predictor of low future returns for speculative stocks.
The examples above highlight this strategy by demonstrating the potential of these
accounts during bull markets and the security they provide during bear cycles.
Shares of companies splitting their stock experience short - term excess returns of 3 % over a two - day period surrounding the
announcement during bull markets.
Some say investors are willing to take on more
risk during bull markets, which might suggest its okay to hold more stocks when the market is rising.
If you can break even (or even incur a small loss) in your shorts portion
during bull markets then you should still keep it.