Bull Market

A bull market is a sustained period where stock prices are going up. There’s no single official threshold, but it’s generally understood as a rise of 20% or more from a recent low. Bull markets tend to last longer than bear markets. Historically, the average bull market has lasted several years, while the average bear market lasts closer to one year.

Why it matters

Bull markets are where most of the wealth creation happens. The majority of long-term stock market gains come from relatively short bursts of strong performance, often at the start of a new bull market, right after a downturn. This is part of why staying invested matters so much. If you sold during a bear market and waited for things to “feel safe” again, you likely missed a big chunk of the recovery.

The tricky part

Bull markets can create a false sense of security. When everything keeps going up, it’s easy to think it’ll keep going forever. People start taking bigger risks, chasing hot stocks, and confusing a rising market with personal investing skill. Then when things turn, the overconfidence can lead to panic.

It’s also worth knowing that bull markets don’t go up in a straight line. There are pullbacks and corrections along the way. A 5% or even 10% dip during a bull market is completely normal. The trend is still upward, but the path is bumpy. Recognizing that these dips are routine, and not a sign that the bull market is over, helps you stay the course.

Example

If you invested $10,000 in the S&P 500 at the bottom of the COVID crash in March 2020, your investment would have roughly doubled to about $20,000 by early 2024. That’s the power of catching a bull market early. But even if you invested at the pre-crash peak in February 2020, you’d still have been up significantly by 2024. Time in the market mattered more than timing it.