DayCents

Bull vs. Bear Market

A bull market is a sustained rise in prices; a bear market is a drop of 20% or more from recent highs. The terms capture market mood — optimism versus fear — and both are a normal part of investing that long-term investors ride through rather than try to time.

The conventional markers are a 20% fall from a recent high for a bear market and a 20% rise from the bottom for a bull, though nobody rings a bell at either point — both are named in hindsight. Bear markets are frequent and historically shorter than bull markets, which matters less than a second pattern: the market's strongest single days cluster near the bottom, often within days of the worst ones. That is why selling in a panic is so expensive, because getting out means being absent for the rebound and there is no signal telling you when to return. A long horizon converts these cycles from a threat into the price of the long-run return.