Money glossary
Bull Market
A bull market is a long stretch of rising stock prices, usually defined as a rise of at least 20% from a recent low.
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What is a bull market?
A bull market is when stock prices rise over an extended period, usually defined as at least 20% up from a recent low. It's named after the way a bull thrusts its horns upward.
Key takeaways
- A bull market means prices are rising over time, usually 20% or more from a recent low.
- Keep investing regularly. Don't try to guess when it will end.
- Stay diversified, even when it feels like everything is going up.
- Bull markets do end, and trying to predict when usually costs people money.
How it works
In a bull market, your portfolio probably looks good. Stocks you bought are worth more than you paid, your retirement account is growing, and suddenly everyone at parties wants to talk about the market.
Behind the scenes, investors are optimistic, companies are generally doing well, and the economy feels strong. That doesn't mean every stock goes up. Some companies still struggle. But the overall trend is up.
Example: investing through a bull market
Say you invest $500 a month for 10 years and earn a hypothetical 8% average annual return. You'd put in $60,000 and end up with about $91,000. Regular contributions keep buying in as prices rise, and growth builds on growth. Real returns vary from year to year and aren't guaranteed. Try your own numbers with the compound interest calculator.
Why sitting out hurts
Some people wait on the sidelines for a crash before investing. The problem is that the market's biggest gains often come in short bursts that are impossible to predict. Miss a handful of those days and your long-term return can shrink a lot. (See market timing.)
How to invest during a bull market
Your strategy shouldn't change much between bull and bear markets. What changes is how people feel.
| Strategy | What people do | What they should do | Why |
|---|---|---|---|
| Regular investing | Stop because "prices are too high" | Keep contributing | Build wealth over time |
| Diversification | Go all in on hot stocks | Stay diversified | Reduce risk |
| Rebalancing | Let winners run wild | Trim back to your target mix | Keep risk where you want it |
| Emotions | Get overconfident | Stick to the plan | Avoid costly mistakes |
| Market timing | Try to call the top | Stay invested long term | Don't miss the upside |
When understanding bull markets helps
Useful for:
- Staying calm and rational instead of emotional about your investments.
- Preparing mentally for the ups and downs of long-term investing.
- Spotting greed and overconfidence in yourself.
- Following conversations about "the market."
Not useful for:
- Timing the market. Almost no one predicts the end of a bull market consistently.
- Making drastic changes. Your plan shouldn't flip because of current conditions.
- Short-term trading. Bull and bear markets are long-term trends, not daily moves.
Over long periods, the U.S. stock market has spent more time rising than falling. That's why time in the market tends to beat timing the market.
Why bull markets end
- Rising interest rates. When the Federal Reserve raises rates to fight inflation, borrowing gets more expensive, companies grow more slowly, and bonds start looking more attractive.
- Economic slowdowns. When the economy shrinks, company profits fall, and stock prices often follow.
- Major shocks. Wars, pandemics, or financial crises can spook investors and set off selling.
When a market falls 20% or more from its high, that's usually called a bear market. (See market drops.)
FAQs
How do I know if we're in a bull market?
Look at a major index like the S&P 500. If it's up 20% or more from its recent low and still rising, it's generally considered a bull market. (See index.)
Should I sell my stocks when a bull market ends?
Not necessarily. If you're investing for 10+ years, staying invested through both bull and bear markets usually beats trying to sell and buy back at the right moments.
Can individual stocks go down during a bull market?
Yes. The overall market can rise while individual companies report bad earnings, face industry problems, or fail. That's why diversification matters.
Is it too late to invest if we're already in a bull market?
No. Bull markets can last years, and waiting for the perfect moment often means missing gains. If you're investing long term, invest consistently whatever the market is doing.
How is a bull market different from a bubble?
A bull market is driven by real economic growth and company profits. A bubble is when prices rise far beyond what the fundamentals justify, usually fueled by hype and speculation. Bubbles tend to pop suddenly.
Should my strategy change during a bull market?
Your core approach should stay the same: diversified, regular investing that fits your goals and risk tolerance. You may need to rebalance if stocks have grown into a bigger share of your portfolio than you want.
Related terms
Your next step
Same numbers, different next move
Knowing the word is step one. Two people can read the same definition and need totally different first moves. Your Money Type tells you yours.
