Always beware of bull traps

PIGGY has been watching the markets and witnessed episodes of bull runs on the Zimbabwe Stock Exchange (ZSE).

A bull market or a bull run refers to a stock market that is characterised by a sustained rise in share prices with most counters trending upwards.

Bull runs normally occur when investors believe the positive trend will continue for the long term.

Bull markets generally take place when the economy is growing.

For example, periods of strong gross domestic product (GDP) and a drop in unemployment rates tend to coincide with a rise in corporate profits.

Investor confidence will also tend climb throughout a bull market period.

e overall demand for stocks will be positive, along with the overall tone of the market.

Another feature is that there will be a general increase in the amount of IPO (Initial Public Offering) activity during bull markets.

However, in the case of the ZSE, the exchange rate movements and inflation pressures have meant that the stock market has been a feasible option for institutional investors to preserve value.

As a result, there has been a demand for quality stocks, and this has pushed prices up.

Bull markets are difficult to predict and analysts can typically only recognise this

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Piggy recommends that investors closely follow market reports, results releases, and trading updates to get it right in terms of timing.