Question

A prominent hedge fund investor argues that basic materials stocks (e.g. producers of iron ore, nickel, steel, cement, fertilizer, etc..) are in a secular bull market. If he is correct, this means that A. Supply of these products will exceed demand over the long-term before reaching equilibrium. B. Demand for these products will exceed supply over the short-term before reaching equilibrium. C. Supply of these products will exceed demand over the short-term before reaching equilibrium. D. Demand for these products will exceed supply over the long-term before reaching equilibrium.

Answer 1

If the hedge fund investor is right, this means the ''demand for these products will exceed supply over the long-term before reaching equilibrium'' in a secular bull market. The correct answer is option D.

What is a secular bull market?

A bear market is when demand is over supply and hence prices are high.  Stocks tend to rise. In a "secular" bear market, this happens for a long period.

• A secular bull market is a market that is driven by forces that could be in place for many years, causing the price of a particular investment or asset class to rise over a long period.

• In a secular bull market, positive conditions such as low interest rates and strong corporate earnings push stock prices higher.
• This long period can be years, 25 to 50 or more years
• In the stock market, a bull market is typically consistent with a 20% rise in stock prices

How does the secular bull market end? or reach equilibrium?

When asset prices fall by at least 20% from recent highs, a secular bull market is said to have ended. Long-term price drops (often lasting two months or longer) indicate the conclusion of a bull market and the start of a bear market. Investors worry over long-term economic development and pessimism are frequently present at the end of a bull market. Investors may sell their stocks and turn to safer alternatives like cash or bonds or certificates of deposit instead of stocks (CDs).

Since the hedge fund investor argues that the basic material stocks are in a secular bull market, he means that the demand for these products were constistently increasing by 20% in the stock market over years.

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Answer 2

If A prominent  hedge fund investor is right, this means the ''Demand for these products will exceed supply over the long-term before reaching equilibrium'' in a secular bull market.

What is a secular bull market?

A bear market is when demand is over supply and hence prices are high.  Stocks tend to rise. In a "secular" bear market, this happens for a long period.

A secular bull market is a market that is driven by forces that could be in place for many years, causing the price of a particular investment or asset class to rise over a long period.

In a secular bull market, positive conditions such as low interest rates and strong corporate earnings push stock prices higher. This long period can be years, 25 to 50 or more years . In the stock market, a bull market is typically consistent with a 20% rise in stock prices.

Thus, we can say that the right answer is D.

Learn more about the Bull and Bear Markets on:

brainly.com/question/14340872

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