However, toward the end of the 80s, economic conditions worsened again. In October of 1987, the stock market crashed, resulting in more than 20% of losses in the Dow Jones in a single day. During a bull market, investors are more confident (bullish) to invest internationally. They get encouraged in a bullish market to expand the existing portfolio.

• Rather, their causes are largely psychological, and the way psychology works is unlikely to change.
• There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors.
• Unfortunately, the potential for inflation began to enter the economy in 1956, which caused the Federal Reserve to increase interest rates.

But just as a bear market can change direction, so can a bull market, as markets are cyclical. Some may be tempted to throw cash into stocks that are booming during a bear market. But those who take a long-term view, diversify, and understand the historical cycles of the market are often best positioned to achieve their financial goals. The optimism of the post-WWII years was fueled by economic strength built in part on a strong export market, which bolstered companies at home. During this period of economic expansion, a strengthened manufacturing sector started a period of innovation, producing new cars and inventions meant to increase household efficiency—in the middle of a baby boom.

Market terminology

There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented. Many of the stock runs in the meantime resulted from the strong performance of the bond market​​. This in itself may incentivise investors to explore other financial markets (like stock markets), but the effect is magnified because low bond yields mean low interest rates.

Market commentary tends to be optimistic in tone, with investor confidence rising. The phrase “bull market” can describe markets in any kind of securities, but typically refers to stock markets. The main characteristic of a bull market is where price in a market trends upwards over an extended period of time — whether months or years. The term ‘bull market’ is usually used to refer to the stock market, but it can also be applied to bonds, currencies, commodities and anything that’s traded. Bull markets are triggered when there’s a lot of demand – when people want to buy.

Usually, all three would show signs of rising stock market indexes simultaneously, driven by economic health and investor sentiment. On the chart below, we can see a further close-up into the years 1949 – 1956 trend. In a growing economy, banks tend to lower their interest rates on loans, and it encourages business and entrepreneurial activity and allows more companies to expand.

What is market volatility?

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Opposite of a bull market, a bear market is when the market goes down and the value of stocks and bonds decrease. Investors tend to lose value in their portfolio and this also translates to a lack of confidence in the market. Usually, a bull market marks a 20% rise in stock prices, which follows a previous 20% decline and is followed by another 20% decline. As you can see from the chart below, there was a bull market that began in 2003 and ended when the S&P 500 hit its peak in 2007. For most investors, it’s best to develop a long-term strategy and stick to it regardless of market conditions.

Market bottom

When the bubble burst, it wiped out many tech companies that previously had strong valuations. One of the most striking examples of a bull market is the post-war boom that the United States experienced after WWII. While there’s no doubt that the war created untold losses for many American families, the need for advanced technology and machinery and many other factors created strong economic conditions once the war was over.

But just a month later, on March 11, the Dow lost over 20% of its value, falling to under 19,000. Widespread fears over economic and social damage brought by the global spread of the new Coronavirus, as businesses shuttered and millions of people were thrown out of work. A similar event occurred back in 2011 when the US government teetered toward an “X-date” (an estimated time at which the US government is unable to continue paying bills).

What Is a Bull Market? Definition, History, & Strategies for Investors

Please see Open to the Public Investing’s Fee Schedule to learn more. U.S. Treasuries (“T-Bill”) investing services on the Public Platform are offered by Jiko Securities, Inc. (“JSI”), a registered broker-dealer and member of FINRA & SIPC. When you enable T-Bill investing on the Public platform, you open a separate brokerage account https://forexarticles.net/superforex-a-reliable-broker/ with JSI (the “Treasury Account”). It went from 6,594.44 in 2009, to a high of 29,551.42 on February 12, 2020, returning 348%. Bear market – substantial decline over a sustained period of time. It is impossible to predict the precise times a bull market will begin and end, and the exact dates can only be determined in retrospect.

Below, you can see the longest bull runs and their growth according to the S&P 500, including the most recent and longest one between 2009 and 2020. If businesses improve their profitability, it shows potential and encourages investors to buy their stocks, lured by a high return on investment. Usually, in a bull phase, several private companies choose to issue an initial public offering (IPO), driven by healthy economic conditions and high investor confidence. It can also describe price fluctuations in sectors highly impacted by consumer confidence such as bonds, commodities like gold or oil, foreign currencies, real estate, or other asset classes. Any that pass through economic cycles and can either gain or lose value over time. If you are in your 20s, 30s or even your 40s and are investing for a far-off goal, like retirement, strive to hold onto your stocks and keep investing during any market.

Brontë is currently the Director of Marketing at PaymentCloud, a merchant services provider that offers business solutions for companies in all industries – no matter the risk. A stock’s price-to-earnings ratio (P/E) is the stock’s price divided by the same company’s earnings per share. This is one of the indicators that investors use to determine if they want to invest in the market. One condition that can lead to a bull market is a low-interest-rate environment.

• Lower interest rates mean debt costs are affordable, making it easier for businesses to borrow money.
• Keep in mind, some bull markets can lead to frenzies, which result in bubbles that exceed earnings.
• The global stock market is composed of stock exchanges around the world.

A bull market tends to occur when the economy is strengthening from increased business investments and higher consumer spending. As people spend more on goods and services, businesses are able to pull in more revenue, create jobs, and invest in new technologies. A bull market (aka a bull run) is a long, extended period in the market when overall stock prices are on the rise. Let’s break down just what bull markets are, how it differs from a bear market, and what they mean for both institutional and individual investors. Bull markets usually follow bear markets, which sometimes coincide with catastrophic events like world wars and Great Depressions. A short bull market after the end of World War II lasted from 1949 to 1956, and after a very brief bear market (less than a year) the bull market resumed until 1966.

Bull Market Examples

However, research from 2019 suggests that the average bull market since 1932 has lasted around 3.8 years. The longest bull market in modern American history is much more recent than you may think. While there is little doubt that Reagan’s tax cuts worked to boost the economy and create the bull run, other factors are also relevant.

The S&P 500 has increased by nearly 19% since its low point last October and is on the brink of transiting into a bull market. However, that does not necessarily mean we are currently in a raging bull market right now. Remember, the stock market needs to increase by about 20% after a period of sharp decline to be named an official bull market. Please refer to Titan’s Program Brochure for important additional information.