BULL & BEAR MARKETS

Plain English

A bull market means stocks are going up (20%+ gain from a low). A bear market means stocks are going down (20%+ decline from a high). Bull markets last longer on average (about 5 years) than bear markets (about 1 year). Historically, stocks always recover.

Going deeper

A bull market is defined as a 20%+ rise from a recent low, characterized by optimism, rising corporate earnings, economic expansion, and investor confidence. A bear market is a 20%+ decline from a recent high, driven by pessimism, recession fears, tightening monetary policy, or external shocks. Since 1945, there have been about 12 bear markets, lasting an average of 14 months with an average decline of 33%. Bull markets have averaged about 5 years with average gains of 180%. Corrections (10-20% declines) happen roughly every 1-2 years and are normal parts of bull markets. Understanding market cycles helps prevent panic selling at lows and euphoric buying at highs.

Examples