Even with expert management, however, the risk involved in mutual fund investing does not disappear. Sometimes, the stock or bond market as a whole may be in decline, and even smart investors are unable to make a profit. Such hard times are referred to as bear markets.
The opposite of a bear market is a time when the markets are steadily rising — bull market. Pessimistic investors are sometimes referred to as bears, while optimists are bulls. Now you understand the livestock references that you often hear scattered throughout financial news reports!
If you’re a long-term investor, bear markets may not be a problem. You can probably wait until the market rebounds before selling your shares. A short-term investor, however, may get stuck with losses. Although you can’t avoid risk altogether, you can choose money market mutual funds or other investments that don’t tend to fluctuate dramatically.
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