What is a bull vs. bear market?

What is a bull market?

The stock market experiences ups and downs due to multiple influences—the state of the economy, investor confidence (or lack of it), and major political events, to name a few. These high and low periods are often described as bull and bear markets. A bull market occurs when stock prices rise 20% above their recent low and stay on that upward trajectory. It’s a reflection of investor optimism.

How long does a bull market usually last?

The duration of bull markets can vary widely. Generally, bull markets last for about five years. However, in the 2000s, the U.S. economy enjoyed nearly a decade of strong growth.

What is a bear market?

A bear market is characterized by a 20% decline in the market—stock prices dropping 20% below their recent high. While market declines can shake investor confidence, the overall trend of the market has been upward over the years. In fact, pulling out of the market when it starts to decline can mean missing out on major growth opportunities when the market begins to rally. Certain investment strategies can ease the effects of market downturns until the next upward trend comes along (more on that to come).

What causes a bear market?

Bear markets can be caused by several factors. A bear market reflects low investor confidence and can be triggered by a stagnating economy, wars, invasions, tense political climates, and many other factors. As stock prices start to fall, some investors get nervous and sell their poorly performing stocks. As the slump deepens, prices may continue to drop, propelling the downward cycle.

What is the average duration of a bear market?

Bear markets vary in duration but generally last an average of 11 months. The stock market crash of 1929, although devastating, only lasted about two months, and the dot-com bust of 2009 lasted less than 18 months.

Does a bear market mean a recession?

Bear markets have been known to follow a recession. For example, the Great Depression followed the slump that occurred from 1929–1932. However, it’s important to note that a bear market doesn’t necessarily cause a recession, and a recession doesn’t necessarily cause a bear market.

When does a bearish market become bullish?

When the market is declining or stagnating but hasn’t reached the severity of a bear market, it may be referred to as bearish. When this type of market begins to rally but hasn’t risen enough to be definitively labeled as a bull market, it can be described as bullish.

Historical examples of bear and bull markets

Throughout history, every bear market has been followed by a period of recovery. Some recovery periods have been slow and labored while others have proven to be quicker and more robust. Here are some examples of past market performance based on the S&P 500®:

Investing in a bear market vs. bull market

It is possible to put market volatility to work for you, but usually a steady, long-term approach is best. Some investing strategies are useful no matter the state of the market and can help you navigate its inevitable ups and downs. Some of the most common strategies are listed below. Please keep in mind that this article covers general information on investing and should not be taken as individual investment advice. You should always consult with an experienced financial professional.

General strategies to deal with market fluctuations include:

Consistency: Trying to time the market is not a good idea. Rather, investors are encouraged to put money into the market consistently and methodically. For example, if you purchase a stock while its price is high, but you continue to purchase shares when the market dips and the price has fallen, your average purchase price will be lowered, meaning a potentially better return on your investment when the share price goes up again. This is referred to as dollar cost averaging. While it doesn’t guarantee a profit or eliminate the risks of investing, it may help smooth out your portfolio.

Diversification: Having a well-diversified portfolio doesn’t completely illuminate risks, but it does help ease the effects of market fluctuations. Certain asset classes outperform others during bear markets. Bond prices, for instance, tend to move in the opposite direction of equity prices. So, when stock prices dip, bond prices may rise, which can help manage risk within your portfolio. Stocks in public utilities and consumer staples may also provide a buffer in volatile markets because their prices tend to be more stable than some other types of investments. Cash and cash equivalents like money markets are relatively low risk although their rate of return tends to be lower than other investment classes. Real estate is good for diversification, but it’s worth noting that it’s not a liquid asset and it can take longer to access its monetary value. Index funds also offer an accessible way for new investors to take advantage of instant diversification.

Monitoring and recalibration: Maintaining an investment strategy that’s compatible with your stage of life and risk tolerance is crucial. When farther from retirement, investors tend to be more comfortable with investments that have potential for greater growth but come with more exposure to market fluctuations. Because retirement is in the distant future, they have more time for the market to recover if there’s a downturn. As retirement gets closer, many investors take a more conservative approach. The consistent monitoring and rebalancing of your portfolio can help you keep your asset allocations within a level of risk that’s comfortable for your circumstances.

Related: Should I pay off debt or invest?

Are we in a bear market or bull market?

The market fluctuates frequently, and it can sometimes be hard to tell its exact status. It may act bullish with promising growth over a sustained period, or it could seem bearish, where prices begin to slide but don’t quite reach the 20% decline that marks a definitive bear market. Market changes are certain, and it’s important to have a strategy that can help you weather its ups and downs.

Bear vs. bull market FAQs

RELATED CONTENT

¹Guggenheim Investments. “S&P 500^® Index Historical Trends”

²Macrotrends. “S&P 500 Historical Annual Returns (1927-2025)”

³Schwab Center for Financial Research. “Bear Market: Now What?”, April 7, 2025