Bull market.
In plain English
A bull market is generally defined as a period when major stock indexes are rising and have moved up at least 20% from a recent low. Bull markets typically last several years (the average since 1950 is about 5-6 years). They feel calm and confident in the middle and dangerously euphoric near the end. Bull markets are how most of the market's long-term gains accumulate.
The opposite: Bear market
A bull market is prices rising over months or years. A bear market is the same market falling 20% or more from its recent high.
Say you hold $10,000 in a broad index fund. In a bull year with a 20% gain, it grows to $12,000. In a bear stretch with a 20% drop, the same $10,000 falls to $8,000. Same fund, same investor. The only thing that changed is the market's direction.
The drop math is harsher than it looks. After falling to $8,000, the fund needs a 25% gain, not 20%, just to get back to $10,000.
01Why it matters
It can be tempting to wait for a 'better entry point' during a bull market, but historically the longer you wait, the more growth you miss. Most years are bull-market years; bear markets are the exception. People who try to time when to enter often miss the biggest bull-market years entirely.
02The math, step by step
The U.S. bull market that began after the 2009 financial crisis ran for roughly 11 years before ending in early 2020. An investor who put $10,000 into a broad U.S. stock index fund at the start would have ended with roughly $40,000+ by the peak, a return that came mostly from staying invested through the noise.
Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.
03What this is NOT
'It's a bull market' doesn't mean every stock or every year goes up. Individual stocks and short-term periods within a bull market can drop hard. The bull-market label describes the overall trend, not a guarantee of any particular investment.
Plain-English answers from our glossary. Receipts included. Never advice.
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