A bull market is a sustained period of rising stock prices, typically defined as a 20% or more increase from a recent low. Bull markets are characterized by investor optimism, strong economic indicators, and increasing employment.
A bear market is the opposite — a decline of 20% or more from a recent high. Bear markets are driven by pessimism, economic contraction, and uncertainty. A correction is a smaller decline of 10-20%, which is a normal and healthy part of market function.
Bear markets can be psychologically challenging, but historically every bear market has eventually been followed by a recovery and new highs. The average bear market lasts about 9-12 months, while the average bull market lasts about 3-5 years.
Investors who maintain a long-term perspective and avoid panic selling during downturns have historically been rewarded. Dollar-cost averaging — investing a fixed amount regularly regardless of market conditions — can be particularly effective during bear markets.
← Back to all investing concepts