Compare and contrast a bear market and a bull market.
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During a Bull market:
- Stock prices rise in the long term
- Inflation is stable, controlled
- Interest rates decline
- Bond prices rise in inverse relationship to interest rates
- Economic indicators are strong and positive
During a Bear market:
- Stock prices fall in the long term
- Inflation rises quickly
- Interest rates rise
- Bond prices decline in inverse relationship to interest rates
- Economic indicators are weak and negative with recession and high unemployment
During both markets:
- Investors can still make money by wisely investing, e.g., in bonds during bear and stocks during bull markets.
- There are investments that defy the general trend (i.e., some stocks rise during a bear market and some fall during a bull market because stock price is still related to company performance within the market).
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