1. The Exact Definitions
Bull Market
A sustained rise in prices, conventionally marked by a gain of 20% or more from a recent low. Characterized by optimism and rising investor confidence.
Bear Market
A prolonged decline of 20% or more from a recent high. Marked by pessimism, fear, and falling confidence.
A drop of 10% to 20% is milder and called a correction — common, healthy, and usually short-lived compared to a full bear market.
2. Why "Bull" and "Bear"?
The imagery comes from how each animal attacks. A bull thrusts its horns upward, symbolizing rising markets. A bear swipes its paws downward, symbolizing falling ones. The metaphor has stuck for centuries.
3. What Causes Each
Bull markets are typically fueled by a growing economy, rising corporate profits, low interest rates, and improving sentiment. Money flows into stocks as investors expect gains.
Bear markets are usually triggered by recessions, rising interest rates, external shocks, or bursting asset bubbles. Falling profits and fear feed on each other, driving prices down.
4. How Long Do They Last?
- •Bull markets historically last much longer than bears — often several years — and produce the bulk of long-term market gains.
- •Bear markets tend to be shorter but sharper, frequently lasting several months to a couple of years.
- •Recoveries from bear-market lows have, historically, eventually exceeded the previous highs.
Perspective: Over the long run, markets have spent far more time rising than falling. This is why time in the market has historically rewarded patient investors.
5. Investing Through the Cycle
Trying to time the exact top or bottom is notoriously difficult, even for professionals. Instead, most long-term investors focus on strategy over prediction:
Stay invested
Missing just a handful of the market's best days — which often cluster near bear-market bottoms — can drastically cut long-term returns.
Keep buying
Regular investing through downturns, or dollar-cost averaging, lets you buy more shares when prices are low.
Manage risk
Diversification and position sizing, covered in our risk management guide, cushion the blow of bear markets.
6. Gauging the Market on WIT
WIT helps you read where the market stands in its cycle:
- Track the major indexes on the dashboard to see the broad trend.
- Check the Fear & Greed Index for a read on sentiment.
- Follow market news for the drivers behind big moves.