What are bull and bear markets?

Definition

A bull market is a time of growth for a stock, an industry, or the overall market, while a bear market indicates a decline.

Understanding bull and/or bear markets

Investors seem to have a liking for animal mascots. The terms "bull" and "bear" markets are widely used in investing language and are represented by animals, conveying positive and negative sentiments, respectively. Although there are no strict guidelines, a bull market is typically characterized by a 20% increase in market value from its bottom over time, while a bear market represents a 20% decrease from its top. The terms "bullish" and "bearish" can be used to refer to optimistic or pessimistic sentiments about the upward or downward movements of various entities, such as individual stocks or entire industries.

Example

During the 1990s, there was a significant rise in the stock market, known as a bull market, due to the first wave of the internet boom. From October 1990 to March 2000, the S&P 500 index grew by 418%. However, things became bearish afterward, with the S&P 500 index falling 40% from its peak through September 2002.

Gist

These are simple terms used to describe whether the market is moving up or down over a period of time. Over time, these words have become broader and are used to describe the overall sentiment of stocks, markets, industries, or even investors' feelings of optimism or pessimism.