The History of Bull and Bear Markets

In other words, stocks were overvalued and a decline was warranted. While this global health crisis continues to evolve, it can be useful to look to past pandemics to better understand how to respond today. Timothy Li is a consultant, accountant, and finance manager with an MBA from USC and over 15 years of corporate finance experience. Timothy has helped provide CEOs and CFOs with deep-dive analytics, providing beautiful stories behind the numbers, graphs, and financial models. “Stocks are at an all-time high. Here’s what stopped the last 12 bull runs.” Other market drops were triggered by freakish circumstances, including the 2010 ‘flash crash’ and the ‘Volmageddon’ volatility eruption in early 2018.

There is no specific, universal metric used to define a bull market. However, perhaps the most common definition of a bull market is a situation in which stock prices rise by 20%, usually after a 20% decline and before a second decline of 20%. Because bull markets are so difficult to predict, analysts can usually only learn about this phenomenon after it has occurred. The period between 2003 and 2007 was one of the prominent bull markets in recent history. During this time, the S&P 500 rose by a large margin after an earlier decline; As the 2008 financial crisis came into play, significant declines occurred again after the bull market rush. The ability to maximize the potential of the instruments available in any market is essential to achieving success.

The Suez Canal crisis and the Soviet Union’s invasion of Hungary added to uncertainty fueling the minor bear market. US stocks are back at all-time highs as the longest bull market in American history continues its record-setting run. The big question now, of course, is whether this 10-year rally will continue. Bull markets end with recessions, and while we’ve seen many bumps on the road to where we are now, the stock market has managed to recover each and every time. There will always be serious risk factors and fears that pervade markets. Registered only as a relatively limited and short-lived blip in the U.S. markets.

bull market us history definition

The most recent bull market is the longest in history; it went from 6,594.44 in 2009, to 29,551.42, its high on February 12, 2020, returning 348%. Kimberly Amadeo is an expert on U.S. and world economies and investing, with over 20 years of experience in economic analysis and business strategy. As a writer for The Balance, Kimberly provides insight on the state of the present-day economy, as well as past events that have had a lasting impact.

1968 marked a turning point for the Vietnam War, when the North Vietnamese launched a surprise attack known as the Tet Offensive. Martin Luther King, Jr., and Robert Kennedy were assassinated, and in November, Richard Nixon won the presidential election. Instability, coupled with a weakening economy and high inflation, led to a bear market and a minor recession.

Bull Market Beginnings

A bull market starts when investors have the feeling that prices are beginning to rise and trust that they will continue to do so. If investor confidence is high, they begin to buy and sell more stocks, which drives up the stock prices. It creates a bull market as prices increase along with the demand. When the bear market begins, investors’ confidence collapses, and they believe prices will continue to fall, further reducing prices. Payback is a brief period during which the general trend of a security’s price is reversed. Even during a bull market, stock prices are only likely to rise.

The image below shows a trend observed by the Dow Industrials between 1949 and 1956, presenting a zig-zag line but generally swinging upward over a long period. This trend includes numerous market corrections, as well as brief bear markets. However, the general trend was trending upward over those 86 months.

bull market us history definition

Long lines became common at gas stations, as gasoline prices exceeded $1 a gallon for the first time in history. Spanning barely two years, the mid-1960s bull market was the shortest in modern American history. But the S&P 500 still managed to soar nearly 50% during the run. But the period was also marked by social and political earthquakes.

During this period, oil prices fell continually and unevenly until they reached a bottom. Regardless of what the market is doing, you should maintain a long-term focus to cultivate long-term wealth. While it can be a smart idea to invest when stocks are cheap, it’s unwise to try to time the market. In terms of returns, the 2009 bull market has the longest streak but it remains in second in terms of the best return.

Some of the Nastiest Bear Markets (So Far)

Since the financial crisis of 2008, the stock market has been growing. Despite some sharp decreases and market corrections along the way, prices have now reached an overall high. A dead cat bounce is a temporary recovery of asset prices from a prolonged decline or bear market that’s followed by a continuation of the downtrend. The terms “bear” and “bull” are thought by some to derive from the way in which each animal attacks its opponents.

The term bear had been in use prior to the breaking of the South Sea Bubble; however, the affair brought bear into widespread use. A secular bull market can last for longer periods, somewhere between 5 to even over 25 years. A cyclical Beaxy: What to Expect From This Review bull market, on the other hand, generally lasts less than 5 years. The value of gold decreased as the gold bear market continued for the most part from 1987 to 2001, after which gold experienced some spectacular bull runs.

bull market us history definition

Click “Screen” upon the page plus the Stock Screener opens, pulling in the symbols coming from the New Highs/Lows page. Available only with a Leading Membership, you could base a Share Screener off the emblems currently within the webpage. Chartists can establish direction by making use of the moving average to the High-Low List.

What does the term bull market mean?

In addition, there will be a general increase in the amount of IPO activity during bull markets. Bull markets generally occur when the economy is strong or when it is really strong. They tend to occur in line with strong gross domestic product and low unemployment and often coincide with a rise in corporate profits. Investor confidence also tends to rise during a bull market period. The overall demand for stocks will be positive, along with the general tone of the market. In addition, there will be an overall increase in the volume of IPO activity during bull markets.

  • A bullish market is one in which prices are generally expected to rise.
  • This specific indicator can shift to its extremities and remain around its extremes whenever the underlying index is in the strong uptrend or perhaps downtrend.
  • What we should focus on, and what is arguably more important to all investors, is performance.
  • But businesses may be overvalued on paper after the IPOs, leading to market corrections or even a bear market.

The dotcom crash of 2000 to 2002 also was spurred by a loss of investor confidence in stock valuations that had reached new historic highs. The S&P 500 tumbled by 36.8% over the course of 1.5 years, punctuated by a brief recession in the middle. The longest time horizon for investors is usually the time between now and whenever they will need to liquidate their investments . Over the longest-possible term, bull markets have gone higher and lasted longer than bear markets. Additionally, one of the best non-numerical indicators for a bull market is rising investor confidence. During these times, there is a strong overall demand for stocks, and the general “tone” of market commentary tends to be positive.

Major Moves of This Bull Market

The High-Low Catalog turns up when that moves over a 20-day SMA and becomes down in order to moves below the 20-day SMA. New levels are increasing and new lows are decreasing when the particular High-Low Index goes up. New highs usually are decreasing and/or fresh lows are Forex Broker Review growing if the High-Low Catalog falls. The High-Low Index is a breadth indicator centered on Record High Percent, which is usually based on new 52-week highs and fresh 52-week lows. Typically the Record High Percent equals new highs divided by new highs plus new lows.

Here are 3 things you should do right now in this market

Then, in January 1973, President Nixon announced phase three of his economic plan, relaxing wage, price and rent controls he had enacted in earlier years. Although he asked businesses and workers to continue to follow the guidelines voluntarily, they seized upon the opportunity to raise prices and make wage demands. Later, in 1963, the bull Top 5 best candlestick patterns you should know market was dealt a scare when Kennedy was assassinated. The S&P 500 plummeted nearly 3% that day and trading was shut down two hours early to honor JFK’s memory. Overall, the S&P 500 has gained 334% in the 121 months since its Great-Recession low in March 2009. Bull markets occur when stocks gain at least 20% from their most recent low.

Prior to the latest one, there was a lengthy bull market that lasted from 2002 until the late-2007 bear market that coincided with the financial crisis. The bottom line is that bull markets tend to be several years in length and are always preceded by and ended by bear markets. Usually, a bull market marks a 20% rise in stock prices, which follows a previous 20% decline and is followed by another 20% decline.

Leave a Reply

%d bloggers like this: