"Bull" and "bear" are two of the most repeated words in financial news, thrown around constantly without much explanation - as if everyone's supposed to already know what they mean. Here's the plain-language version.
What a bull market is
A bull market is a sustained period of rising stock prices, generally accompanied by investor optimism and a growing economy. There's no single universal threshold, but a common reference point is a rise of roughly 20% or more from a recent low, sustained over an extended period - sometimes years.
What a bear market is
A bear market is the opposite: a sustained decline, most commonly defined as a drop of 20% or more from recent highs. Bear markets tend to come with pessimism, uncertainty, and investors becoming more cautious or fearful about the future.
Bull vs bear, side by side
| Bull Market | Bear Market | |
|---|---|---|
| Direction | Rising prices | Falling prices (20%+ from highs) |
| Investor mood | Optimistic, confident | Pessimistic, cautious |
| Typical economic backdrop | Growth, often lower interest rates | Slowdown, often higher interest rates or inflation |
| Historical average duration | Several years | Under a year and a half |
What typically causes each one
Bull markets tend to build on a mix of factors: healthy economic growth, strong corporate earnings, low interest rates that make borrowing and investing more attractive, and general investor confidence feeding on itself.
Bear markets tend to emerge from the opposite mix: weakening growth, rising interest rates, high inflation, declining corporate earnings, or a sudden shock - geopolitical, financial, or economic - that damages investor confidence quickly. This overlaps closely with the ideas covered in our guides on what a recession actually is and what happens during a stock market crash - a crash is a sudden, sharp event, while a bear market describes the broader, sustained downturn it can be part of.
How long do they actually last?
Historically, bull markets have tended to run considerably longer than bear markets - often for several years at a time, compared to bear markets which have historically lasted under a year and a half on average. That said, these are historical patterns, not rules, and any specific future cycle's length and severity cannot be predicted in advance.
Why the label itself shouldn't drive your decisions
It's tempting to treat "we're in a bear market" as a signal to sell, or "we're in a bull market" as a signal to buy more aggressively - but by the time a market is officially labeled one or the other, a significant part of the move has usually already happened. Reacting to the label itself, after the fact, is a common way investors end up buying high and selling low rather than the reverse.
How long-term investors typically think about this
Rather than trying to predict or react to the label, many long-term investors rely on the same principles covered in our guides on dollar-cost averaging and understanding market volatility - staying invested and consistent through both phases of the cycle, rather than trying to jump in and out based on which "market" the headlines say we're currently in.
Frequently Asked Questions
What is the difference between a bull market and a bear market?
A bull market is a sustained period of rising stock prices, generally linked to economic growth and investor optimism. A bear market is a decline of 20% or more from recent highs, generally linked to economic weakness and pessimism.
How long do bull and bear markets usually last?
Historically, bull markets have tended to last considerably longer than bear markets - often several years, compared to bear markets which have historically averaged under a year and a half, though both vary widely and any specific future cycle cannot be predicted.
What causes a bear market?
Bear markets are typically associated with a combination of factors: weakening economic growth, rising interest rates, high inflation, declining corporate earnings, or a sudden shock to investor confidence.
Should I sell my investments during a bear market?
Selling during a bear market locks in losses and removes any chance of participating in the eventual recovery. Many long-term investors instead focus on sticking with their existing plan rather than reacting to the label itself.