Bull & Bear Market

A bull market is a sustained rise in prices; a bear market is a sustained fall. The names come from how the animals attack — a bull tossing its horns upward, a bear swiping its paws down.

The common thresholds are a 20% fall from the peak for a bear market and a 20% rise from the trough for a bull market. A decline of around 10% is called a correction instead.

Historically bull markets last longer and travel further than bear markets. Bears tend to be short and steep, often around a year, while bulls grind upward over several years. The record favours those who stayed invested.

The difficulty is that you cannot tell which one you are in from the middle of it. Whether a fall is the start of a bear market or a passing correction only becomes clear afterwards, which is why buying steadily beats trying to time it. By the time the news calls it a bull market it has usually risen a great deal, and by the time it says bear market much of the fall has happened. The labels attach to ground already covered.