What type of market is defined by an expectation that stock prices will increase in the future?

A market characterized by the expectation that stock prices will increase in the future is referred to as a bull market. In this environment, investor confidence is high, leading to increased buying activity. As more participants enter the market anticipating higher prices, demand for stocks rises, which typically drives prices up even further.

The notion of a bull market is pivotal because it reflects a period when the overall sentiment is optimistic, often fueled by strong economic factors or positive developments in specific sectors. It’s a time when investors are more likely to take risks, as the prospect of gains outweighs concerns about potential losses.

Understanding this concept is important because bull markets can influence investment strategies and overall market dynamics, shaping how individuals and institutions approach their asset allocation and portfolio management.