Investing & Markets

What is Bull Market?

A bull market is a sustained period when prices rise, typically by 20% or more from recent lows. While the term can apply to any asset class (such as bonds or real estate), it is most commonly used to describe the stock market. A bull market is traditionally defined as a rise in stock indexes of 20% or more from a recent low.

Bull markets are driven by strong economic indicators, such as high gross domestic product (GDP) growth, low unemployment, rising corporate profits, and high investor confidence. During a bull market, investor demand for stocks is high, leading to upward price momentum.

Bull markets can last for years, but they are inevitably followed by market corrections or bear markets. Understanding bull markets helps investors avoid overconfidence and maintain balanced asset allocations, preventing them from taking excessive risk near market peaks.

Quick Facts

Traditional ThresholdRise of 20% or more in stock indexes from recent lows

Economic IndicatorsStrong GDP growth, low unemployment, rising corporate earnings

Investor BehaviorHigh consumer confidence and strong demand for equities

LifespanCan last for several years before a market correction

PRACTICAL EXAMPLE

Following a major recession, the S&P 500 index rises from a low of 3,000 to 3,600, crossing the 20% bull market threshold. Prices continue to rise over the next three years as corporate earnings expand.

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RELATED TERMS

Learn More Key Concepts

StockA financial security representing a fractional share of ownership in a corporation, conveying voting rights and claims on assets.

Bear MarketA market condition where asset prices fall by 20% or more from recent highs, driven by investor pessimism.

VolatilityA statistical measure of the dispersion of returns for a given security or market index over time.

LiquidityThe ease with which an asset can be converted into cash quickly without affecting the asset's market price.

P/E RatioA valuation ratio calculated by dividing a company's current share price by its earnings per share.

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