How to Invest in a Bull Market

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

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.

Did You Know?
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.