Navigating Bull Markets: A Beginners Guide

bull market definition us history

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bull market definition us history

Common investor jargon also uses the word “bull” to describe someone who buys securities in the expectation of a price increase. In sports and money, records are our obsession and our aspiration. The record investors were talking about in the third week of August 2018 was whether this bull market ranked as the longest in history. Many people were ready to crown it as such, and good arguments were supporting that claim. Yet, there is also a pretty valid argument against it, especially in the arena of technical analysis. The economy appears strong, unemployment is typically low, businesses are profiting and expanding, and the overall market sentiment is positive.

Longest bull market to date – 2009 to 2020 (131 months)

For example, the Covid-19 pandemic brought on the shortest ever recorded recession. Global lockdowns in 2020 contracted the GDP by 31%, a decline in GDP worse than during the Great Depression. But the economy made a speedy recovery, and by Q3 2021, the GDP growth was back to 2%, signaling continued economic expansion. Roboadvisors are a popular way to make steady contributions to your stock investments in index funds. is an app that uses AI technology to help you select investment kits that align with your personal interest and values. Once you make your selections, you can keep an eye on your portfolio growth in the app.

Then, sell stocks at the right time before prices reach their peak and plummet. As with most investment strategies, there are risks involved, and it can be difficult to predict when prices will reach their peak. A bull market doesn’t only apply to stock markets, and it can also mean that prices are continuously cfd trading platform rising for securities and assets like bonds, real estate, commodities, or currencies. High investor confidence in line with a stable economy will help the market to grow. If several investors feel positive about certain security, asset, or stock, it can create a movement caused by crowd psychology.

So it’s definitely time to start thinking about what this transition means for you as an investor. You might even wonder if now’s the right moment to completely revamp your portfolio. After all, it’s clear that certain types of stocks tend to perform better in bull markets. But that doesn’t necessarily mean you should start from scratch every time the market shifts. Bull markets can last for years and they can be local – one market might be ‘bullish’ while others around the world are struggling. The term is often used in the media when stock markets are rising, or when confidence returns, and people think a bear market is coming to an end.

This graph measures the total gains of the main stock market indexes over time. The late 90s and early 2000s witnessed some of the highest gains in a Bull Market time period, only to have dropped off after overvalued tech companies began selling off or failing. A Bear Market experiences a decrease in stock prices over a period of time. It is generally accepted that a decrease of 20% or more in stock market value is considered a Bear Market. The imagery of a bull-rushing symbolizes the effect a general rise in stock markets has on investors.

What is the difference between a bear and a bull market?

The Housing Bubble — a dramatic growth in the real estate sector — began after the federal government deeply cut interest rates in hopes of encouraging investment. The bull market ended in early October 2007 as stocks hit their peak, marking the start of a recession. When the economy is growing, investors may be more confident in the future, which makes them more eager to buy stocks and other investments that tend to benefit from periods of growth. This lack of supply compared to demand can cause prices to go up, potentially until they hit the 20% threshold for a bull market. The opposite of a bull market is a bear market, which is typically defined as stocks falling by 20% or more from a recent peak. Bear markets are often accompanied by recessions, falling investor confidence, and declines in corporate profits.

Typically, over the course of a bull market, different types of stocks will lead the pack. Prior to the latest one, there was a lengthy bull market that lasted from 2002 until the late-2007 bear market that coincided with the financial crisis. The bottom line is that bull markets tend to be several years in length and are always preceded by and ended by bear markets. When the economy hits a rough patch, for instance in the face of recession or spike in unemployment, it becomes difficult to sustain rising stock prices.

bull market definition us history

Sometimes stocks go up because other economic indicators are heading in the same direction. is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site.

Broadly speaking, a bull market is a sustained period — usually months or years — when prices rise. The term is most commonly used in reference to the stock market, but other asset classes can have bull markets as well, such as real estate, commodities, or foreign currencies. Bull markets generally take place when the economy is strengthening or when it is already strong. They tend to happen in line with strong gross domestic product (GDP) and a drop in unemployment and will often coincide with a rise in corporate profits. Investor confidence will also tend to climb throughout a bull market period.

When you enable T-Bill investing on the Public platform, you open a separate brokerage account with JSI (the «Treasury Account»). The Long Bull Market and the potential profits encouraged people to invest in stock leading to heavy speculation on the Stock Exchange. Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. At Bankrate we strive to help you make smarter financial decisions.

Bull Meaning in Stock Market

For example, if the percentage of your portfolio that’s invested in stocks is too high for your long-term investing plan, you might consider rebalancing to shift more money into bonds. This could provide a way to smooth out ups and downs of the market. Meanwhile, the bull market following the Great Depression is close behind our current bull market.

  • The S&P surged by over 400%, driven by economic growth and stable inflation.
  • But this compensation does not influence the information we publish, or the reviews that you see on this site.
  • In this post, we will define a bull market and explain what bullish investing behavior means.
  • If you want to explore bull and bear markets further, our comprehensive glossary has lots more definitions of related terms including bear market, stock market, trend and investor.

On the chart below, we can see a further close-up into the years 1949 – 1956 trend. In a growing economy, banks tend to lower their interest rates on loans, and it encourages business and entrepreneurial activity and allows more companies to expand. When central banks like the United States Federal Reserve lower their interest rates, stocks become an attractive investment opportunity for more people. Top-line growth of top-line revenue (TLR) refers to a business’s gross turnover or revenues. If a company is experiencing high turnover, it means the company has top-line growth. Furthermore, top-line growth should usually increase in line with the GDP and is, therefore, a good measure to reflect demand.

When the selling began, it was exacerbated by computerized trading, then still in its infancy, without the so-called circuit breakers that would now halt trading during such a plunge. Here’s a look at the five other longest bull markets of the past 70 years. Regardless of what the market is doing, you should maintain a long-term focus to cultivate long-term wealth.

Bull market vs. bear market

Rather, market trackers at S&P Dow Jones Indices define a bull market as a 20% rise in the S&P 500 from its previous low. By that measure – a 20% gain off the low – the current bull market began on April 8, 2020. It’s believed by some that bulls first became synonymous with rising and falling prices when people would place bets on whether dogs could kill a bull chained to a post—called bull-baiting.

Investors have enjoyed 11 bull markets — defined as a period without a pullback of 20 percent or more — since the end of World War II. Usually driven by a strengthening economy that fuels corporate profits, bull markets often end in recession after the Federal Reserve begins to raise rates to slow rising prices and cool the economy. Investors’ psychology and stock market performance are also mutually dependent. In a bull market, the increase in stock market prices boosts investor confidence, which causes investors to put their money in the market in the hope of obtaining a profit. A bull market is a cycle in which prices continue to rise over a certain period of time. As an example, let’s look at some of the longest bull markets since World War II.

What you need to know about bull markets

The length of a bull market can vary widely, with some lasting just a few months, while others may last years. They die when the market has changed fundamentally, when prices have risen too high or too fast, or when some other event deflates investor confidence in the market. While there are many different ideas on how the term bull market came to be, it’s generally believed that it comes from how a bull attacks. A bull thrusts its horns upward when it attacks, so the term was adapted to describe stock market growth.

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