How to Invest in a Bull Market

Take advantage of a rampaging bull market with these financial tips.

Instructions

  • Step 1: Buy mutual funds Buy mutual funds, which tend to go up in a bull market because the funds are all buying the same stocks.
  • Step 2: Sell small-cap stocks Sell small-cap stocks, also known as emerging-growth stocks, which don't usually see as much growth in a bull market because they are not owned by mutual funds.
  • Step 3: Buy emerging-market stocks Buy stocks sold in emerging markets because a strong world economy boosts their value.
  • Step 4: Sell your bonds Consider selling safe investments like bonds and dividend-paying stocks so you can take advantage of the higher returns that can be collected during a bull market.
  • TIP: Don't sell your safe investments if you are nearing retirement age.
  • Step 5: Buy "on margin" Consider buying stocks "on margin" – which means buying them with borrowed money. Stocks are more likely to rise during a bull market, making you enough money to justify the risk.
  • Step 6: Trade stock options Buy stock options, which are easy to profit from in the volatile atmosphere of a bull market.
  • Step 7: Don't buy IPOs Don't buy initial public offerings, also known as IPOs. In a bull market, there's such a demand for stock that many mediocre companies go public, only to go bust later.
  • Step 8: Buy the currencies of emerging countries Buy the currencies of emerging economies, which tend to thrive in good global economies thanks to their low costs of manufacturing.
  • FACT: According to the Stock Trader's Almanac, the longest bull market on record ran from October 11, 1990 to July 17, 1998, gaining a total of 295 percent in value.

You Will Need

  • Mutual funds
  • Stocks
  • The currency of emerging countries

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