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What is an "institutional investor"?

An institutional investor is a large organization that pools money together with other large organizations, as well as individuals, and invests this money in private and public companies.

Who are these institutional investors?

Institutional investors can be commercial banks, investment banks, mutual funds, pension companies, retirement fund companies, and hedge fund companies.

Why is it good to be an institutional investor?

Because of their size, institutional investors can obtain a better price for the shares they buy. They trade in huge volumes of stock, both buying and selling, and their effect can swing stock prices at any moment during the day. Institutional investors also can command the best price when they are interested in selling their positions because they hold so much of a particular stock.

What other benefits do institutional investors have?

Because of the magnitude of the number of shares they own, institutional investors' positions can allow them to have management say in the direction of a company, and they are occasionally given a seat on the boards of both private and public companies they may own.

What is a "bear market"?

A bear market occurs when there has been a decline in a stock market average of 20%

Bear markets are protracted periods of time in which stock prices go down.

Bear markets are protracted periods of time in which stock prices go down.

from a high, and is often characterized as a period of time when stock prices are in a state of decline, reported profits of listed companies are less than expected, inflation is increasing, interest rates are relatively high and increasing, and money is flowing out of the stock markets.

Why do bear markets happen?

Bear markets happen for many reasons. According to many experts, bear markets occur because investors are pessimistic about where the economy is headed, causing the declines to sustain themselves over a long period of time. Investors sell their shares, anticipating losses, and other investors see more losses in their portfolios, so they sell also. During bear markets, capital may be sidelined, or may be directed toward other investments such as bonds or cash in expectation of a signal to return to the equity markets.

 
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