Bull Market Definition, History & Examples

bull market definition us history

When a market is rising, it’s sometimes referred to as ‘bullish’. As well as bull and bearmarkets, investors often speak about bullish and bearish stocks. Bullish stocksare those characterised by very strong uptrend moves, in which the price rises in waves.

Think of a bear swiping downward with its claws, knocking the market down. A Bear Market experiences a decrease in stock prices over a period of time. It is generally accepted that a decrease of 20% or more in stock market value is considered a Bear Market. A time period of overall stock market growth in the U.S. economy. More specifically, a 20% overall stock market increase following a 20% decline.

How to Invest in a Bull Market

As a result, it tends to be difficult to be a trader around bull markets, and instead it makes sense for investors to think and invest longer term rather than try to trade in and out. A bull market often signals the end of a bear market, a period of declining prices, though the turn to a bull market can only be judged in retrospect, when the shift is clear. The market may meander sideways for a long time before it ultimately decides to move higher and become a bull market. For example, you might invest $100 weekly, regardless of what the stock market is doing. By doing this, you’re buying more shares when the price is low and fewer shares when the price is high. Over time, this can help to average out the cost of your investment.

bull market definition us history

A Bear Market is a time period marked by a wide decline in stocks. Bull Market investors are more confident in investing because it is safer to make money. Bear Market investing is a lot riskier and investors have to take riskier options if they want to see an increase in their portfolio.

This involves investing equal dollar amounts at specific time intervals, which can help you invest during a bull market while allowing your portfolio to benefit from corrections and crashes as well. When attempting to time the market, you risk buying high before the market declines. That can lead you to make rash decisions, like selling at a loss to try and salvage some cash.

JPMorgan, Wells Fargo expect deposits to extend Q2 declines

Although COVID-19 ended the streak, it didn’t affect the market index as we expected. Companies were laying off workers left and right, some were closing their doors for good, and there was a rising fear as many people were touched by the virus. The global fear could have led toward an economic shutdown that could have devastated the financial markets. However, after one of the shortest bear markets we’ve seen, the stock market bounced back. Although some indicators of bull markets can be measured more easily, such as unemployment statistics and corporate profits, some things like investor confidence and financial optimism may be more difficult to detect.

  • The S&P 500 rose 0.6% in Thursday’s session, lifted by technology stocks, while volatility dropped to record lows ahead of an eventful economic and policy calendar next week.
  • The run ended suddenly on 19 October 1987, known as Black Monday, when the Dow Jones Industrial Average fell 22.6% in a day.
  • A bull attacks with its horns swinging upward whereas a bear strikes downward with its paws.
  • Supply and demand are varied when investors try to shift allocation of their investments between asset types.
  • Note that this retrospective categorizing of the stock market is similar to what the National Bureau of Economic Research does for the economy.

If the market rises, say, another 10 percent in the next month, putting us squarely in bull market territory by any definition, I’ll be richer now. But say the market then falls 30 percent in August — and stays low for years. But as far as categorizing and periodizing the stock market, there is a better way. The economy appears strong, unemployment is typically low, businesses are profiting and expanding, and the overall market sentiment is positive. All these good things happening at once can make investors feel pretty good about increasing their portfolios.

It is difficult to predict consistently when the trends in the market might change. Part of the difficulty is that psychological effects and speculation may sometimes play a large role in the markets. The difference between a bull and bear market is in the current market condition. While a bull market is a sign of a rising market, a bear market indicates a falling market and is sometimes a sign of higher volatility – which can increase your risk#. The main problem with that definition is that it seems to be saying something about where the market is going and not about where it has been. Yet investors who have been in the stock market since the start of last year have, in fact, lost money.

But just a month later, on March 11, the Dow lost over 20% of its value, falling to under 19,000. Widespread fears over economic and social damage brought by the global spread of the new Coronavirus, as businesses shuttered and millions of people were thrown out of work. Because it’s impossible to tell when a market has reached its top from a ground-level perspective, it’s very difficult to https://g-markets.net/helpful-articles/restored-falling-wedge-pattern-sees-bitcoin-rising/ foresee the turning point before you are in it. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. Bankrate follows a strict
editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.

Full Swing Trading

Low interest rates mean that borrowing is cheap, which allows greater investment and fuels bull markets. The terms “bull market” and “bear market​” are seen everywhere in the world of finance, but what do they mean? In this article, we explore what constitutes a bull and bear market, some distinguishing characteristics, and how a trader might position themselves within these different environments. The most commonly accepted definition is a 20% rise off a low for a bull market and a 20% decline from a high for a bear market, but even that is open to interpretation. William O’Neil reported that, since the 1950s, a market top is characterized by three to five distribution days in a major stock market index occurring within a relatively short period of time.

bull market definition us history

This growth rate is relatively low compared to other bull runs, thanks to lingering scepticism following the financial crisis which may, ironically, have elongated the run by staving off euphoria. The run ended in March 2020 when the coronavirus pandemic ravaged global markets. Part of the uncertainty is that there is no set definition of a bull or bear market, or any sort of regulatory body that declares one, such as the National Bureau of Economic Research (NBER) does with recessions.

Dictionary Entries Near bull market

First, if a bull market means to you that stocks are trending unequivocally upward, then, no, the bull market label is being misapplied right now. It’s not at all clear what the trend of the market will be for the next month or year. Second, even as a retrospective measurement of how the market has performed, this bull market designation is premature, using a stricter definition, one that seems much more sensible to me, as I’ll explain. Keep in mind that other fees such as regulatory fees, Premium subscription fees, commissions on trades during extended trading hours, wire transfer fees, and paper statement fees may apply to your brokerage account. Please see Open to the Public Investing’s Fee Schedule to learn more.

Average investors need to maintain a long-term perspective during a bull market. While there are many different ideas on how the term bull market came to be, it’s generally believed that it comes from how a bull attacks. A bull thrusts its horns upward when it attacks, so the term was adapted to describe stock market growth.

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  • This leads to high supply and low demand, which further drives the prices of the shares down.
  • For example, stocks entered a bull market in March 2009, amid the Great Recession, and lasted until COVID-19 effectively shut down the world economy in March 2020.
  • Then, when the market goes back up or another bull market comes around, your portfolio will experience growth and the earnings will increase.

The stock market’s average annual return from 1926 to 2021 was 12.3%. With that in mind, long-term investors shouldn’t get caught up in the type of market they’re in but stick to their investment strategy. In addition, a bull market is often characterized by greater liquidity in the market, as there is more demand for securities and fewer sellers, making it easier for investors to buy and sell quickly at a reasonable price. Companies that are performing well in a bull market may also choose to reward their shareholders by increasing dividends, which can be attractive for income-focused investors.

This bull run was curtailed in part when the Fed raised interest rates and investor confidence was shaken by international tensions. A bull market occurs when financial markets rise for a period of time and this can last anywhere from months to years. This type of market gives investors confidence as they may see more returns with their portfolios. The stock market has experienced many bull markets over the years.

Low interest rates and low corporate tax rates also are positive for corporate profitability. Since bull markets are difficult to predict, analysts can typically only recognize this phenomenon after it has happened. A notable bull market in recent history was the period between 2003 and 2007. During this time, the S&P 500 increased by a significant margin after a previous decline; as the 2008 financial crisis took effect, major declines occurred again after the bull market run. Bull markets are characterized by optimism, investor confidence, and expectations that strong results should continue for an extended period of time.

Since then, the market began improving and financial experts predicted that we were no longer in a bear market as of early 2023. A bull market is generally a good thing because it can indicate economic growth and optimism among business and consumers. It may also result in equity growth and higher dividends, depending on the stock and the sector. Another notable bull market was between 2003 and 2007 when the stock market made a significant increase and the S&P 500 nearly doubled in value over this period.

Where have you heard about bull markets?

References to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any strategy managed by Titan. The longest bull stock market in American history was from 2009 and 2020. Between the Great Recession and the COVID pandemic, the S&P 500 rose 334% for a 30% annualized return.

Banking services and bank accounts are offered by Jiko Bank, a division of Mid-Central National Bank, Member FDIC. A primary trend has broad support throughout the entire market (most sectors) and lasts for a year or more. Stay informed on the most impactful business and financial news with analysis from our team. Our evaluations and opinions are not influenced by our advertising relationships, but we may earn a commission from our partners’ links. This content is created independently from TIME’s editorial staff.

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