A bull market is a period of rising stock prices — and it’s the market’s natural response to a downturn. Like sunshine after rain, up markets have historically followed down markets. Here’s the bull market meaning, how bull markets work, and what history tells us about investing during a bull market.
1. What Is a Bull Market?
A bull market is a period of upward-trending prices. A new bull market begins once prices rise at least 20% off the most recent market bottom. Optimism tends to run high during these periods — investors and consumers feel confident, which pushes company earnings and stock prices higher.
2. The Stock Market Isn’t the Economy
Though they often move together, the stock market and the economy aren’t the same thing. The stock market is a forward-looking indicator, reflecting investor expectations for the next year or so rather than current conditions. That means stocks can rise even when the broader economy feels sluggish.
3. Bull vs. Bear Market: Bulls Tend to Go Bigger
Both bull and bear markets are normal and common. The S&P 500 Index has experienced 27 of each since 1928, though bull markets have tended to be stronger and longer.
- Average bull market: gains of 114%–115% over roughly 2.7 years
- Average bear market: losses of about 35%, lasting less than a year
4. Are We in a Bull Market?
It can take weeks or months to confirm a 20% move off a low. The tricky part is that we often don’t know we’re in a bull market until after the fact — it’s possible for the market to retest previous lows even after rallying 20%.
5. Bulls Are Strongest Out of the Gates
Historically, the first half of a bull market has outperformed the second half in 20 of the last 27 bull markets since 1928 — about 74% of the time.
6. Waiting for the “Right Time” Can Cost You
Since a new bull market is only identifiable once it’s already underway, waiting for the right time to invest could mean missing the market’s strongest days. Historically:
- The first month of a new bull market gained an average of 13.6%
- The first three months gained an average of 25.3%
7. Bull Markets Come in All Shapes and Sizes
- Longest on record: 1987–2000, running more than 12 years and rising 582%
- Shortest on record: June 1931, lasting just 25 days yet still generating a 27% return
8. Bull Markets Have Gotten Stronger Over Time
The S&P 500 has gained an average of 114% during bull markets overall — but returns have grown since the 1970s:
- The 18 bull markets before 1970 gained about 78% on average
- The 9 bull markets after 1970 gained about 186% on average
9. Don’t Let a Bull Market Psych You Out
Bull markets can set new records repeatedly, which may leave you wondering when a downturn is coming. But trying to time the market and sell at the top can mean missing out on significant further gains.
10. How Can You Make the Most of a Bull Market?
If your portfolio is well-diversified, your investing strategy may not need much adjustment to keep pace with a rising market. Working with a financial professional can help make sure your portfolio is prepared for every stage of the market cycle — a step that’s valuable for investors across Florida and beyond.
S&P 500 Bull Markets By the Numbers
- Since 1928, there have been 27 bull markets
- Average gain: 114.9%
- Average length: 992 days (about 2.7 years)
- Longest bull market: 1987–2000 (582% gain); second longest: 2009–2020 (400% gain)
- The first half of a bull market has outperformed the second half 74% of the time (20 of 27 bulls), by an average of 9%
- Average gain, first month of a new bull: 13.6%
- Average gain, first 3 months: 25.3%
- Average gain, first 6 months: 27.4%
Source: Ned Davis Research. Past performance does not guarantee future results.
Bottom Line
Bull markets are a normal, recurring part of investing — and historically, they’ve outpaced and outlasted bear markets. Whether you’re just starting to invest or reviewing an existing portfolio, understanding how bull markets work can help you stay focused on your long-term strategy instead of reacting to short-term swings.
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Frequently Asked Question
What is a bull market in simple terms?
A bull market is a period when stock prices rise at least 20% from their most recent low, typically accompanied by investor optimism and rising company earnings.
What’s the difference between a bull market and a bear market?
A bull market is a period of rising prices (up 20%+ from a low), while a bear market is a period of falling prices (down 20%+ from a high). Bull markets have historically been stronger and lasted longer than bear markets.
How long does the average bull market last?
Since 1928, the average S&P 500 bull market has lasted about 2.7 years (992 days) and gained roughly 115%.
Should I wait for a bull market to start investing?
Timing the exact start of a bull market is difficult, since it’s usually only confirmed after the fact. Historically, waiting can mean missing some of the market’s strongest early gains — the first three months of a new bull market have averaged a 25.3% return.
Important disclosures: Forecasts are based on current conditions, are subject to change, and may not come to pass. All investments are subject to market fluctuation, risk, and loss of principal. When sold, investments may be worth more or less than their original cost.
