Think of the stock market as the animal kingdom for a moment.
It’s just as diverse a place with many different “species” of investors who all have their own unique ways of maneuvering within the jungle that is Wall Street.
And if you want to significantly build your wealth through the stock market, you need to know if you’re a bull, a bear, or a pig…
First of all, it’s important to know that there are 3 types of markets: a bull market, a bear market, and a pig market.
Bull Market
As you likely already know, a bull market is an ascending market. Generally speaking, the bull market will be more gradual than a bear market, and will last several years.
Bear Market
On the flip side, a bear market is a descending market that will generally happen much faster than a bull market.
As the saying goes, “The bull walks up the stairs, but the bear falls out the window”. That illustrates the speed and severity of each market.
Pig Market
The pig market is a transitioning market, where there’s really no defined direction. Volatility is normally prevalent in this type of market, so while there’s quick money to be made, it can also leave you vulnerable.
And within each of those markets is a community of investors who can be loosely defined by animal analogies…
Bull Investor
Bulls are generally optimistic investors who bet on securities, ETFs, indices, commodities, etc. to go up in price. Bulls are the buyers in the stock market.
Many bulls are defined like this simply because they think all they can do as an investor is buy a security and hope it goes up. They don’t realize they can short securities as a downward bet.
Bear Investor
The bears of the stock market are quite the opposite. Not only do they know that betting on something to decline in price is a possibility, but they are the “pessimistic” investors who take advantage of those opportunities.
Pig Investor
The pig investor is the most ambitious of them all. A pig will bet big on a security, and then even after it doubles in price, he will hang onto the investment in the hope that it will double again.
The pig teaches us a very important lesson…
Yes, the stock market is a place where you CAN build up wealth and change your life. BUT you also need to have a system in place that takes emotion out of the equation. That’s the only way to see things clearly with money on the line.
So be aspirational and understand that the stock market can be an incredible income stream for you, but make sure you have the structure in place to cut losers fast, ride winners without being greedy, and realize that you can’t trade just for the sake of trading.
