This article presents some concepts related to the stock market. These concepts are basic facts that people who are planning to invest in the stock market need to be aware of.

Bull market and bear market
You would have probably read that the stock market was bullish, but what do the terms bull market and bear market mean?

The bull market is when the stock market is rising, that is, the average value of the market shares is up. The value of most of the shares would have risen in a bull market. A 20% rise in the index from a recent low is termed as a bull market, and it is generally seen when the economy and industries are doing well and people have good expectations from the future.

The bear market is the opposite, where the economy is falling. When there is a lack of confidence in the economy and performance of companies, the stock prices start falling. When there is a 20% fall from a recent upswing, it is termed as a bear market.

An informed and intelligent investor would buy in a bear market and sell in a bull market, which is how the top investors make money.

Stock market crash
The fluctuation of the prices of shares listed in the stock market is a common phenomenon, but the share prices dropping suddenly by double-digit numbers is referred to as a crash. A stock market crash can happen for various reasons, and a lot of people lose money due to it.

However, you must remember that when the market crashes, it can rise again. Those who have made long-term investments will not worry about stock market crashes.

Diversification
It is risky to put your money in the stock market as there is a possibility of losing it all. One of the best strategies to reduce this risk is to diversify.
Remember the old saying – don’t put all your eggs in one basket! Diversification is putting your eggs in different baskets. This means spreading your money across many shares instead of investing all of it in one or two shares. This way, if you have 5 different shares and the market is down, 3 may be doing badly and 2 may perform well.

Similarly, you can buy shares of different types of companies from different industry sectors to help in spreading your investments.

Growth and value
Growth investing is where you buy stocks of companies that would grow stronger. For this, you need to invest in companies that use the latest technologies or those that are developing innovations.

Value investing is where you invest in a company that is down at present but has the potential to improve and turn around. You can buy these shares at very low prices and make a lot of money when the prices go up.