Definition: Bullish is a broadly used term to describe an investor’s belief that a specific security, sector, the stock market as a whole, or the nation’s economy is expected to grow.
What Does Bullish Mean?
What is the definition of bullish? Believing that the market is likely to improve, a bull investor opens a long-position to realize a profit from the difference between the price he is buying the stock and the higher price he is expecting to sell it. Bullish investors create the market sentiment by focusing on identifying investment opportunities that are likely to increase in value, thus realizing a higher return.
Usually, a bullish market is characterized by rallies during which stock prices may rise to historical highs, and even start-up companies may see their stocks grow. Technically a bull market is a rise in the value of the market of at least 20%.
Let’s look at an example.
Example
Marilyn is a risk-taker investor who likes to invest in growth companies with an earnings potential. Although she has lost money during the real estate crisis, she has not lost her confidence in the stock market, and she believes that the stock prices are set to rise further.
To capitalize on the expected upturn of the market, Marilyn opens a long position for 1,000 shares of a technology stock that currently trades at $86.44. By opening the long position, Marilyn buys the shares for $86.44, expecting that the price will rise over the next days. The stock price rises to $102.68 and Marilyn closes her long position by selling the 1,000 shares at $102.68, thus realizing a gross profit of ($102.68 – $86.44) x 1,000 = $16,240.
Bullish investors believe in the stock market even when they know that some stocks may be overvalued and they are more likely to capitalize on market opportunities that only risk taker investors would consider. The more the bullish investors, the more likely is the market to rise as a result of the massive buying of stocks.
Summary Definition
Define Bullish: Bullish means an investor who is optimistic about the stock market and believes it will grow in the near future. Thus, he or she is eager to purchase investments.
