Bull and Bear Markets

Markets move in cycles. The two most commonly referenced phases are bull markets (rising) and bear markets (declining).

Bull Market

A bull market is a period of sustained price increases, generally defined as a rise of 20% or more from a recent low. Bull markets are characterized by optimism, economic growth, and strong corporate earnings.

Bear Market

A bear market is a decline of 20% or more from a recent high. Bear markets are often accompanied by economic slowdowns, rising unemployment, or financial crises. They can last months or years.

Historical Context

Since 1950, U.S. markets have experienced multiple bear markets, but each was eventually followed by a recovery. Bull markets have historically lasted longer than bear markets on average.

Cycles Are Normal

Markets do not move in one direction forever. Periods of growth are naturally followed by corrections or declines. Understanding this cycle helps set realistic expectations.

Patience

Many long-term investors view bear markets as part of the journey rather than a reason to exit. Short-term declines, while uncomfortable, have historically been temporary.