Stocks Are in a Bull Market. What Does That Mean? (2024)

FAQs

Stocks Are in a Bull Market. What Does That Mean? ›

In a bull market, equity prices move higher overall, boosting investor confidence, and making investors less risk-averse. In this environment, low-risk bonds are less appealing than riskier stocks, and stocks surge in response.

A bull market is commonly defined as a period of time when major stock market indexes are generally rising, with market indexes eventually reaching new highs. (Reminder: A stock market index is a collection of stocks that are tracked over time to gauge their overall performance.

A bull market refers to major upswing in the markets, while a bear market is a pronounced market downturn. Bull markets often correspond to periods of economic and job growth; bear markets are often tied to periods of economic decline and a shrinking economy.

Bull Market. A period of increased stock trading and rising stock prices.

Is a bull market good or bad? A bull market is generally a good thing because it can indicate economic growth and optimism among business and consumers. It may also result in equity growth and higher dividends, depending on the stock and the sector.

In a bull market, the ideal action for an investor is to take advantage of rising prices by buying stocks early in the trend (if possible) and then selling them when they have reached their peak.

How long the average bull market lasts. As much as investors would like the answer to this question to be "forever," bull markets tend to run for just under four years. The average bull market duration, since 1932, is 3.8 years, according to market research firm InvesTech Research.

The S&P 500 soared throughout the year and finally reached a new high in January 2024, making the new bull market official. The onset of a new bull market has historically been a very reliable stock market indicator.

The current bull market started in October 2022, which means it is now just less than 19 months old. If it ended now, it would be the shortest bull market ever. Most bull markets last much longer. The last 12 bull markets have averaged more than five years.

Growth stocks in bull markets tend to perform well, while value stocks are usually better buys in bear markets. Value stocks are generally less popular in bull markets based on the perception that, when the economy is growing, "undervalued" stocks must be cheap for a reason.

What are the best growth stocks right now? ›

A bull market is a market condition in which prices are rising. This is the opposite of a bear market in which prices are declining. In the case of the stock market, a bull market occurs when major stock indices such as the S&P 500 and the Dow rise at least 20% and continue to rise.

Key takeaways

A bull market occurs when securities are on the rise, while a bear market occurs when securities fall for a sustained period of time.

You should always stay on the same side of momentum. So, you can buy high and wait for the stock to go higher; or you can use dips to buy. Either ways, you should never try to outguess the market. In a bull market, the very idea of selling against momentum can land you in big losses.

If a stock falls to or close to zero, it means that the company is effectively bankrupt and has no value to shareholders. “A company typically goes to zero when it becomes bankrupt or is technically insolvent, such as Silicon Valley Bank,” says Darren Sissons, partner and portfolio manager at Campbell, Lee & Ross.

Don't let it psych you out — Bull markets can set new records constantly, which may make you wonder when the other shoe is going to drop. But attempting to time the market and sell high could also mean missing out on significant further gains.

Investors who believe prices will rise are known as “bulls” because of their upbeat attitude toward the market. They can profit by purchasing assets for less money and selling them for more. Bulls gain from price uptrends and positive sentiment in the crypto market.

It's no secret that we're in a new bull market. Investors have enjoyed soaring stock prices as the S&P 500 (^GSPC 0.25%) has climbed by more than 46% from its lowest point in late 2022. But now that we're over a year-and-a-half into this bull market, some investors may be wondering just how much longer it might last.

Believe it or not, the term "bear market" originates with pioneer bearskin traders. The country's early traders would sell skins they'd not yet received – or paid for. Because the traders hoped to buy the fur from trappers at a lower price than what they'd sold it for, "bears" became synonymous with a declining market.

Economic growth actually accelerated above its 10-year average in 2023. That resilience, coupled with a fascination about artificial intelligence (AI), changed investors' collective mood. The S&P 500 soared throughout the year and finally reached a new high in January 2024, making the new bull market official.