Definition

A bull market is a period in the stock market where prices are rising or are expected to rise. Typically, a bull market is marked by a sustained increase of 20% or more in major stock indices, signaling confidence among investors and overall economic growth. It is the opposite of a bear market, which features declining stock prices.

Analogy

Think of a bull market like a strong, powerful bull charging forward. Bulls thrust their horns upward, symbolizing rising prices. During this time, investors are eager to buy, pushing the prices upward, and optimism is high, just like the excitement of watching a bull race ahead in the field.

This picture sums it all:

Little-Known Fact

Since 1928, there have been 27 bull markets.

Longest bull: 1987–2000 (582% gain); second longest; 2009–2020 (400% gain)

Action Step if you are in a bull market:

• Stay Informed: In a bull market, it's easy to get swept up in the excitement. Make sure you stay grounded by researching and understanding market trends and not just riding on the momentum.

• Diversify Your Portfolio: While a bull market may be full of opportunities, it’s important not to put all your eggs in one basket. Diversification helps manage risk even when things seem to be booming.

• Set Realistic Expectations: The market doesn't rise forever. Be aware of the possibility that the bull market can slow down, and always have an exit strategy or a backup plan in place.

• Continue to Invest Smartly: If you're new to investing, a bull market can seem like an easy win. But continue to make calculated decisions that align with your long-term financial goals rather than just riding the wave.