Bulls and Bears: The Eternal Philosophy of Financial Markets
There are two groups of traders in the stock market. Some go long and hope that the price of the stock will increase. Others create "short" positions and think that the value of the security will fall. The first group of traders are called bulls. They push the stock price up with their horns. Short sellers are called bears. This group of players “paws” the price from above and lowers it.
The battle of bulls and bears has no end and no end. Both groups of stock players periodically lose and win each other. Bears often provoke economic crises. They sell stocks en masse, "dropping" their price to a historical low. The rise in the value of a security can last for several years, and the fall often occurs in a matter of days.
Bears often make a lot of money on the rapid fall of share prices and the value of financial instruments . One of the most famous bears is George Soros. In 1992, he managed to earn $ 1 billion from the fall of the pound sterling. A fall bet is always accompanied by margin lending. Too much leverage can lead to a margin call. Forced closing of a position leads to a “drain” of the brokerage account.
A typical bull is Warren Buffett. He makes large bets on the rise in the value of securities over a long period of time. Buffett is the most successful investor in the world. Many traders tried to copy his trading strategy, but no one succeeded. The Oracle of Omaha professes the philosophy of "stock optimism". He believes that the shares of profitable companies undervalued by the market will definitely rise in price.
Some experienced stock players know how to earn both on the growth of the rate and on its fall. This is the highest class of "stock aerobatics". Not all traders master it. The psychology of the market crowd is such that the same people often become bulls and bears. Mass psychosis has a very large suggestive power. Someone who just a minute ago followed a "bearish" strategy suddenly becomes a bull and vice versa. Changing the "animal skin" is extremely simple. To do this, you need to press just a couple of buttons on the keyboard.