Bull and Bear Market: Definition & Difference

But declining markets can seem like a ransacking bear on the loose – they destroy everything and make people lose confidence. As a noun, bear can refer to a person who believes that market prices, especially of stocks, will decline. As a noun, bull can refer to a person who believes that market prices, especially of stocks, will increase. Typically, it is seen that the country’s economy is strong and employment levels are high during this phase of the market. Once they no longer have an active income stream, many people shift their investing strategies to preservation instead of growth.

Bull and Bear Market: Definition & Difference

In crypto investing, the term “bullish” refers to positive investor sentiment about digital assets, with such investors commonly called “bulls”. Bullish investors are usually adding to their existing positions with the expectation the forward momentum will continue. Confidence is high, and can be infectious, which can have the effect of propelling a bull market even further.

Bull Market vs Bear Market – What to Consider in Each

Generally, a bull market occurs when there is a rise of 20% or more in a broad market index over at least a two-month period. When stocks are rising during a bull market, it usually indicates a time of economic expansion, that the economy is strong and investors are confident. Since 1932, the average length of a bull market has remained just under four years.

Both the Dow Jones Industrial Average and the Nasdaq are also in bull markets, having entered them on Nov. 30, 2022, and May 8, 2023, respectively. However, not all long movements in the market can be characterized as bull or bear. Sometimes a market may go through a period of stagnation as it tries to find direction.

Bull vs. Bear Market: What’s the Difference?

It exists when the prices – normally the closing prices – of securities or indexes that track a set of securities, typically those of equities, rise. While not every stock will necessarily increase, the market’s main equity indexes will. For example, during a bull market the Dow Jones Industrial Average and the S&P 500 can be expected to climb, even as some individual equities and sectors may not. Unlike a bear market, there is no universally accepted percentage gauge for how much a market has to rise before it qualifies as a bull market. The longest bull market in American history for stocks lasted for 4,494 days and ran from December 1987 to March 2000. Ultimately, bear markets are a good time to revisit your goals and objectives and remind yourself of why you’re invested where you are.

Let’s take a look at bull vs bear markets, examples of each, and the impact they have on your financial strategy, to set the record straight. Then there are more specific signals such as death cross and golden cross that can anticipate a bull or bear market. The Fear&Greed index then can provide you with sentiment data, allowing you to understand what phase of the cycle you are in.

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The most severe bear market chopped 86% from the market’s value; it extended from Sept. 3, 1929 to July 8, 1932. While these periods are difficult to endure, history shows you probably won’t have to wait too long for the market to recover. And if you’re investing for a long-term goal — such as retirement — the bear markets you’ll endure will be overshadowed by bull markets.

What is a bull vs bear vs pig market?

This old Wall Street saying warns against excessive greed. Here's what it means for you. Image source: Getty Images. "Bulls make money, bears make money, pigs get slaughtered" is an old investment industry saying that warns against being excessively greedy.

Low unemployment tends to boost the price of assets such as cryptocurrencies. However, even the smallest growth of this indicator can turn the situation upside down. Thus, on October 7, 2022, quotes of the first cryptocurrency failed at the level of $20,000 after Bull and Bear Market: Definition & Difference a report on the level of unemployment in the U.S., thereby strengthening bearish sentiment. At the moment the bear market starts, most professional investors, as a rule, have been selling their portfolios for some time, because they saw the reversal coming.

The longest bear market took place shortly after the dot-com bubble, lasting from 2000 to 2002. Usually, a bull market happens when the economy is strong or getting stronger. High employment rates, high gross domestic product, and other measures of economic well being and stability are generally thought to correlate with bull markets.

  • The value of crypto assets can increase or decrease, and you could lose all or a substantial amount of your purchase price.
  • It takes much longer to recover from a bear market than it does for a bull market to reverse direction because investors and traders need more time before taking high-risk trades again.
  • In the bear market, stock trading declines, returns are low, investor confidence is low, and often accompanied by the recession in the economy.
  • A bearish investor, also known as a bear, is one who believes prices will go down.
  • This is the opposite of a bear market which has fewer job opportunities, lower salaries, and decreased corporate gains due to increased competition.
  • This isn’t a short-term dip like during a correction when there are price declines of 10% to 20%.
  • When investors are bearish on an individual stock, that sentiment is unlikely to affect the market as a whole.

Still, a 20% increase in prices is often used as the ballpark figure that indicates a bull market. This indicates that Indian markets are not yet in the grip of a bear market. Market experts, on the other hand, believe that given the current geopolitical environment and macroeconomic factors, we may witness a further decline.

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