Bull Market vs Bear Market: Definitions and Differences
Short answer. A bull market is a sustained rise in prices, commonly described as a gain of 20% or more from a recent low, with optimism and rising economic activity. A bear market is a fall of 20% or more from a recent high, typically with pessimism and often a weakening economy. Both end; neither can be timed reliably.
Side by side
| Bull market | Bear market | |
|---|---|---|
| Price trend | Sustained rise | Decline of 20% or more from a recent high |
| Investor sentiment | Optimism, rising risk appetite | Fear, falling risk appetite |
| Economy | Usually growing, with strong earnings | Often slowing, sometimes alongside a recession |
| Typical length | Usually years | Usually months to a couple of years |
| Common investor errors | Overconfidence, chasing returns | Panic selling at lows |
| Sensible response | Keep to your asset allocation and rebalance | Keep to your plan, keep diversified, keep investing if you can |
Frequently asked questions
Why are they called bull and bear markets?
The usual explanation is how the animals attack: a bull thrusts its horns upward, a bear swipes downward.
How long do bear markets last?
Historically US bear markets have lasted from a few months to a couple of years, and bull markets have lasted considerably longer. Past durations do not predict the next one.
Is a 10% drop a bear market?
No. A fall of 10% to 20% is generally called a correction; a bear market is 20% or more.
General education, not personal financial advice. Figures are typical US examples and vary by provider and year.