Bull vs. bear market: What do they mean for you?

Bull and bear markets typically describe broad market trends over time, not the daily ups and downs you see in the headlines. Understanding these market cycles can help you interpret headlines more calmly and keep a long‑term perspective—especially if you’re early or mid‑career and building wealth over many years.

Let’s take a closer look at how bull and bear markets are defined and what generally distinguishes these market environments.

What is a bull market?

A bull market occurs when stock prices rise at least 20% after a previous decline of 20% or more. Bull markets often occur during strong economic periods and can last for months or even years.

During a bull market, you may notice low unemployment, high corporate profitability and solid gross domestic product (GDP). Investor confidence tends to be high. For many newer investors, bull markets can feel encouraging as account balances grow and headlines trend positive. 

What is a bear market?

A bear market happens when the market declines by 20% or more from a recent peak. Bear markets often take hold when economic conditions weaken.

During a bear market, you may notice declining GDP, rising unemployment and lower investor confidence as uncertainty increases.

While the definitions are clear, it’s hard to tell what kind of market you’re in while it’s happening. Short-term declines can feel dramatic, even when they’re part of normal market movement. One common misidentification is confusing a bear market with a market correction, which is defined as a decline of 10% or more. Market corrections are a normal part of investing and can occur for many reasons without turning into longer‑lasting bear markets. 

Bull market vs. bear market

Even without focusing on percentages, certain patterns tend to show up in each market cycle.

What happens during a bull market

• Lower unemployment
• Higher company profits
• Growing or stable GDP
• New companies going public

What happens during a bear market

• Job market uncertainty
• Rising prices or slower economic growth
• More cautious spending and investing behavior

If headlines begin to influence how confident or anxious you feel about investing, that emotional reaction can be a useful signal to step back and look at the long-term picture.

Stock market history: A look back at bull and bear markets

Looking at past market cycles shows that markets tend to move through distinct phases over time. Periods of growth and decline are a normal part of long-term investing.

The last significant bear market started in October 2007 and lasted until March 2009. During that time, the Dow Jones Industrial Average, Nasdaq Composite and S&P 500 suffered declines of more than 50%. A $787 billion government stimulus package in 2009 helped spark a bull market that lasted until 2020. It was one of the longest bull markets in Wall Street history.

More recently, a steep market decline at the beginning of the COVID-19 pandemic led to a short-lived bear market in early 2020. Another brief bear market occurred in late 2022 amid persistent high inflation and rising interest rates.

These examples highlight that market cycles can and do change, sometimes quickly. Over a long investing horizon, you may experience multiple bull and bear markets.

How long do bull markets last?

Historically, the average bull market period lasted 8.3 years, with an average cumulative total return of 276%. ¹  While every cycle is different, this helps illustrate why many investors focus on a long‑term investing approach rather than trying to predict market turning points.

How long do bear markets last?

Historically, the average bear market period lasted 1.5 years, with an average cumulative loss of -36%. ¹ Bear markets may feel intense while they’re happening, but they’ve generally been shorter than bull markets.

Investing during a bull or bear market

Markets naturally move through bull and bear market cycles. It’s normal to feel more confident when markets are rising and anxious when markets decline. Understanding these cycles may help you avoid emotional decisions during short-term market swings.

Many investors focus on maintaining a diversified portfolio aligned with your financial goals, time horizon and risk tolerance—regardless of market conditions. A financial professional can help you review your strategy and consider whether to make changes as markets, and your life, change.

Frequently asked questions

How do you invest during a bear market?

Investing during a bear market often involves focusing on long-term goals and personal risk tolerance. Some investors may see lower prices as an opportunity to add to investments over time, while continuing to emphasize diversification to help manage risk.

Can a market correction turn into a bear market?

Yes, a market correction can evolve into a bear market if stock prices continue to decline beyond the 20% threshold. However, many market corrections resolve themselves without triggering a full bear market.

Are bear markets tied to economic recessions?

Bear markets often precede or coincide with economic recessions, as declining stock prices can reflect slowing economic activity and lower consumer confidence. That said, it’s possible for a bear market to occur without a formal recession.

How should newer investors think about their first bear market?

Experiencing a market decline for the first time can feel unsettling. If you’re a newer investor, you may find it helpful to focus on what you can control, such as consistency, diversification and long‑term goals, rather than daily market movements.