Page 1060 - How to Make Money in Stocks Trilogy

46 HOW TO MAKE MONEY IN STOCKS—GETTING STARTED

How Long Do Bull and Bear Markets Typically Last?
The length varies, but here are some general guidelines:

• Bull markets typically last 2 to 4 years.
• Bear markets typically last 8 to 9 months.

Why Should You Pay Attention to What “Stage”
the Bull Market Cycle Is In?
Because the really big gains typically happen within the first two years of a
bull market.
By the time you get into the third year of a bull cycle, two things tend to
happen:

• The market becomes more choppy and volatile. That’s a sign the
bull is getting tired, and the enthusiasm found at the beginning of the
cycle is starting to fade. Interim corrections may become more frequent
and deep. But as long as the bull market uptrend remains in place, you
may still find plenty of money-making opportunities. Just stay on your
toes and stick to the buying and selling checklists since you know a bear
market will emerge at some point.
• Leading stocks start to peak and roll over. As they say, nothing goes
up forever. In the later stages of a bull market, institutional investors will
start to cash out of the big leaders—and when they start to sell, those
stocks start to drop.
When that happens, it doesn’t matter how great the company’s earnings
growth and products may be, it’s time for you to protect your hard-earned
profits. Whether it’s Apple, Google, Netflix, Chipotle Mexican Grill, or any
other leading stock in any bull market, at some point you’ll need to lock in
your gains—and that becomes particularly important when a bear market
begins to take hold. (More on that in Chapter 5, “Selling Checklist.”)