Bull Market” vs “Bear Market” What’s The Difference?

Bull and Bear Market: Definition & Difference

The bear market definition is exactly the opposite of a bull market. It’s a market where quarter after quarter the market is moving down about 20 percent. That signals a bear market, and when that happens people start to get really scared about putting money into the stock market. Information provided on Forbes Advisor is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circumstances. We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities.

Bull and Bear Market: Definition & Difference

S&P 500, generally fall — but not necessarily by similar amounts. If you’re invested in a mix of relative winners and losers, it helps to minimize your portfolio’s overall losses. Inflation and interest rates — to judge when the economy is slowing. We believe Bull and Bear Market: Definition & Difference everyone should be able to make financial decisions with confidence. I also write a daily blog which is read by thousands nationwide from individuals to professionals at In other words, a place where today’s free lunches are paid for doubly tomorrow.

Growth in corporate earnings

A few extreme examples of bear markets are the Great Recession around the 2008 financial crisis and the Great Depression, which roughly began with the stock market crash of 1929. In contrast, the post-World War II economic boom is considered an example of a bull market.

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Bonds also are an attractive investment during shaky periods in the stock market because their prices often move in the opposite direction of stock prices. The investing information provided on this page is for educational purposes only.

Investor Psychology

In a bull market, which is a continued rise in stock prices, you’ll likely see high investor confidence and a perception that there’s a strong economic environment. Bull market and bear market are terms frequently used to describe the ups and downs of the stock market. A bullish market represents rising stock prices, as it symbolically charges ahead with confidence. Conversely, a bearish market represents declining stock prices, as it symbolically retreats down into hibernation. Understanding the contrast between bull vs. bear markets can help you feel more confident as an investor, especially when the stock market seems to be headed for a market downturn.

  • Stash does not guarantee any level of performance or that any client will avoid losses in the client’s account.
  • In a bullish market, you can expect stock prices to increase over 20 percent for an extended period.
  • A decline of that magnitude may force you to delay retiring until your portfolio recovers.
  • Most experts agree that a bear market is one in which securities prices have fallen 20% from recent highs, if not more, spawning widespread pessimism from investors.
  • Keep in mind that past performance does not guarantee future returns.

Listed SecuritiesListed security refers to a financial instrument such as stocks, bonds, derivatives, etc., registered with and readily tradable on the stock exchanges like NASDAQ and NYSE. Though macroeconomic factors do play a role in market regimes, they are not the main issue that drives them. In fact, it’s generally used only as ex-post justification for what already dominates investor psychology. Using arobo-advisoris an easy and affordable way to be hands-off with your investing approach. The value of your investments can go up and down, and you may get back less than you invest.

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The trading of stock is high in bulls market, but in bears market, the stock trading is comparatively low. Bulls thrust up their horns while attacking the opponent, in the same way, when the market rises belligerently, it is said to be a bulls market. On the other hand, bears swipes down, their paws for attacking the opponent, likewise, when the market falls, it is known as bears market. When acquiring our derivative https://www.bigshotrading.info/ products you have no entitlement, right or obligation to the underlying financial asset. AxiTrader is not a financial adviser and all services are provided on an execution only basis. Information is of a general nature only and does not consider your financial objectives, needs or personal circumstances. Important legal documents in relation to our products and services are available on our website.

Is it better to buy stocks in a bull or bear market?

In a bull market, stocks are typically rising in value, so it may be a good time to buy shares that are undervalued and have good potential for growth. However, bear markets can also present opportunities to buy stocks at a discount, so it is important to weigh all your options before making any investment decisions. Always conduct your own due diligence before investing, looking at technical and fundamental analysis, latest news and analysts’ commentary.

In a bullish market, investors are usually optimistic and eager to capitalize on the profits. To do so, investors will buy and hold onto their securities of choice, hoping to earn money as the prices trend upward. While a bear market is when stock prices drop by 20% or more, a bull market is when stock prices rise by 20% or more. During bull markets, investors tend to be optimistic and reward even modestly good news with higher stock prices, fueling an upward spiral. In the long term, the markets “weigh” the substance of the underlying cash flows and value. During bull market trends, investors become overly optimistic about the future bid up prices beyond the reasonable aspects of the underlying value.

The history of bull and bear markets

The average increase during a bull market is 114%; the average decline in a bear market is 36%. Investor psychology is always a factor in any sort of market activity. That’s why we recommend beginners consider using a financial advisor. Beyond that, a strong economy and a high level of employment are often factors that propel the stock market.

  • The shortest bull market, which ran from June 1, 1932, to September 7, 1932, lasted 98 days.
  • In statistical terms, the market is bullish when a rise of 20% in the stock market’s performance is observed.
  • A large, sudden drop in the market as a whole, or even just one segment of the market, can snowball into a panic.
  • When you toss a coin, the occurrence of heads or tails is based purely on chance and is, therefore, unpredictable.

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