What is a Bull Market?
A bull market is when prices of securities, such as stocks, are rising or expected to rise over an extended period. A bull market is typically characterized by an optimistic sentiment among investors, high trading volumes, and a general sense of economic prosperity.
Positive economic indicators, such as low unemployment, high consumer confidence, and strong corporate earnings often drive bull markets. In these environments, investors are generally optimistic about the future and are willing to take on more risk, creating a buyer’s market.
What is a Bear Market?
Bear markets occur when stock prices fall 20% or more over an extended period. A bear market is often identified by a negative outlook among investors, reduced trading activity, and overall economic pessimism.
In contrast to a bull market, a bear market can be triggered by adverse economic indicators, such as elevated unemployment, low consumer confidence, and weakened corporate earnings. During these environments, investors are generally pessimistic about the future and are more risk-averse, resulting in a seller’s market.
Both markets can last for varying lengths of time, ranging from a few months to several years. While the stock market has experienced sustained periods of both growth and collapse, it has historically performed well. The most recent and longest bull market was from 2009 to 2019, following the housing crisis.
A bull market may be a favorable time for investors while bear markets can be challenging, but it’s important to remember that market cycles are inevitable and incredibly difficult to predict. In order to better weather the uncertainty, we recommend that investors utilize experienced asset managers who offer diversified portfolios that can weather the ups and downs of the market.
The term “bull market” comes from the image of a bull attacking its prey with an upward thrust of its horns, symbolizing the market’s upward momentum.
The term “bear market” comes from the image of a bear swiping its paws downward to attack its prey, symbolizing the market’s downward momentum.
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