What Is a Bull Market? Causes and History The Motley Fool


Bear markets vs. bull markets, on average, last less than 10 months and occur during times of crisis or struggle. On the other hand, bull markets generally last, on average, 2.7 years and occur during times of economic growth and optimistic investor outlooks. A bull market tends to occur when the economy is strengthening from increased business investments and higher consumer spending. As people spend more on goods and services, businesses can generate more revenue, create jobs, and invest in new technologies.

  1. But other market analysis and research houses view bull markets differently.
  2. For example, you might invest the same amount at regular intervals, using the popular investing strategy called dollar-cost averaging.
  3. 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.
  4. The ensuing bear market cut fast and deep, but bottomed out in late March.

This involves investing equal dollar amounts at specific time intervals, which can help you invest during a bull market while allowing your portfolio to benefit from corrections and crashes as well. Barajas says value stocks can be another good place to look during early-stage bull markets. Perhaps the most aggressive way of attempting to capitalize on a bull market is the process known as full swing trading. Investors utilizing this strategy will take very active roles, using short-selling and other techniques to attempt to squeeze out maximum gains as shifts occur within the context of a larger bull market.

Bull Market of 1982-1987: Reaganomics

We believe everyone should be able to make financial decisions with confidence. Avoid trying to guess when the bull market might end and stay the course with your investment plan, which should have been built with the market’s highs and lows in mind. The offers that appear on this site are from companies that compensate us. But this compensation https://www.day-trading.info/following-the-crowd-the-wisdom-of-crowds/ does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. Economists had feared a severe recession was unavoidable after the Fed raised interest rates by more than five percentage points in less than 18 months.

What kills a bull market

Eventually, however, higher rates choke off growth as inflation erodes the value of investment returns. Some say it’s because the New York Stock Exchange is built on land that was used by the Dutch in the 17th century to auction off cattle. Another popular explanation https://www.topforexnews.org/investing/9-best-investments-in-2021-4/ is that rising markets were once fueled by fast-talking brokers with exaggerated claims about stocks (thus the phrase, “a line of bull”). Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer.

Fidelity does not assume any duty to update any of the information. Sometimes stocks go up because other economic indicators are heading in the same direction. Wayne Duggan has a decade of experience covering breaking market news and providing analysis and commentary related to popular stocks. News & World Report and a regular contributor for Forbes Advisor and USA Today. The 2023 bull market that began in June can be backdated to the S&P 500’s most recent lows in October 2022, but there’s no way to know for sure how long it could last.

Others point to Shakespeare’s plays, which make reference to battles involving bulls and bears. In “Macbeth,” the ill-fated titular character says his enemies have tethered him to a stake but “bear-like, I must fight the course.” In “Much Ado About Nothing,” the bull is a savage but noble beast. Unfortunately, by 1968, the Vietnam War, a weakening economy and high inflation had turned the go-go market into the gone-gone market. “There are a lot talking heads in the marketplace that speculate and it’s very difficult to follow speculative advice if you don’t necessarily have an idea of what it is you’d like to accomplish,” says Nwasike. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. These signals aren’t reliable enough to guide investment decisions, Paré and Fernandez both say.

Potentially, this could leave the stock market in a tentative state of increased volatility as an individual’s creditworthiness is weighed down. Generally, it’s better to enter and leave the market gradually, without drama, rather than selling all at once because you’re convinced the market has reached its top. Depending on your financial goals, you’re investing strategy can change. The best investment apps offer a range of investment options (including stocks, bonds, and cryptocurrencies) and market access. You can also access educational resources, research access, and human advisors for low fees.

The Longest Bull Run in History: March 2009 to March 2020

Paré says that a person’s goals and risk tolerance should guide buying and selling decisions — not attempts to buy at the bottom of bear markets and sell at the top of bull markets. Since companies tend to be more profitable during bull markets, it could be a good time to ask for a raise or a promotion. It might also be an opportune time to research other job opportunities when the economy is strong versus during a bear market and down economy, when companies are more likely to cut jobs. Since the 18th century, investors have used the term “bull market” to describe stock prices going up. They celebrate this symbol so much that there’s an actual bull statue near Wall Street in New York City. The bull market that began in August 1982 represents a period of economic prosperity in the U.S. that political conservatives characterize as the era of Reaganomics.

That is, a bull will thrust its horns up into the air, while a bear will swipe down. These actions were then related metaphorically to the movement of a market. These are just a few examples of some of the biggest bull markets in history.

By doing this, you’re buying more shares when the price is low and fewer shares when the price is high. Over time, this can help to average out the cost of your investment. Bull markets can last for years, but they must eventually come to an end. When the stock market experiences a prolonged downturn, it’s called a bear market. “I recommend that people be long-term investors with a diversified portfolio, and not try to time the market. After all, to be a good market timer, you have to be right twice; you have to know when to buy, and when to sell,” Fernandez said.

Bull markets can last for months or even years, and stocks tend to outperform other investments like bonds. Bull markets typically occur with a growing economy, as rising corporate profits translate into rising stock prices. Higher profits and the expectation of still-higher profits can fuel investors’ expectations, causing them to bid up asset prices as long unity software gets a fresh ‘buy’ rating and a $126 price target from goldman sachs as the future looks bright. 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.

The Federal Reserve raising interest rates and international tension stopped this bull’s run, beginning a bear market phase. In these prime post-war years, the S&P 500 rose 267% over 86 months, leading to a commendable annualized return of 20%. On the home front, consumer goods to fuel the Baby Boom were the main driver, while a strong export market also helped companies grow. It’s almost impossible to tell when the market is at its peak, and even professionals rarely manage to call it right. Not only can you sell too late, but you might also end up selling way too early and missing out on future profits.

Public sentiment is another potential signal of a transition between bull and bear markets, according to Paré. Looking ahead, investors are now optimistic the Fed can pivot from rate hikes to rate cuts in 2024, opening the door for more upside to stock prices. In fact, the S&P 500 doubled off its March 2020 lows in just 354 trading days. “With over $5.5 trillion sitting in money markets and a lot of offsides positioning in the first half, we suspect there will not be a shortage of investors stepping in to buy the dip into this bull market,” he says. After eight months of gains, the S&P 500 finally entered a bull market in June 2023. The new bull market hasn’t made much progress so far, but history suggests the advances seen since the October 2022 low could be just the first leg of a multi-year market rally.


Please enter your comment!
Please enter your name here