Basics Intermediate: Understanding Bull and Bear Markets

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1.
What does the advance-decline line use to forecast market trends?
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A net advance. This figure measures the difference between the number of stocks advancing in price and the number declining in price.
2.
Why do bonds perform well during bear markets?
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Their returns stay the same. Bond returns are fixed no matter what the market. They can't rise or fall.
3.
What was the longest bear market in the United States?
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The Great Depression. By far, this was the longest bear market.
4.
One way to profit during a bear market is to buy the stocks of companies that perform well in both bull and bear markets. What are these stocks called?
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Defensive stocks. They can go by many names. The most common is "defensive stocks."
5.
If you believe in "buying low and selling high," at which of the following points should you sell your stock?
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When the stock begins to move downward. This signals that the bull market may be reversing, although it is never certain. This signal is not present during the other situations mentioned, because they may just be periods of slow growth.