Investor Corner/The asset classes/Equity Concepts
2.1.3 Bull Market vs Bear Market
A bull market is a period of rising prices and general optimism. A bear market is the opposite: falling prices and widespread pessimism. Both describe mood and direction, not a permanent state.
Two words for market mood
There is no official, universal trigger for either label, though a fall of 20% or more from a recent high is a commonly used rule of thumb for a bear market. What matters more than the exact threshold is understanding that both terms describe a phase, not a destination. Every bull market eventually ends, and every bear market in history has eventually ended too.
Why the labels can mislead
Calling a period a bull or bear market is easy in hindsight and far harder in the moment. Many investors only recognise a bull market once it is well underway, after much of the gain has already happened, and only recognise a bear market once the fall is largely done. Reacting to the label after the fact tends to produce the opposite of the intended result.
What actually matters for a long-term investor
For someone investing for a goal ten or twenty years away, a bear market along the way is close to a certainty rather than a risk to be avoided entirely. The practical response is not to try to predict the next bull or bear phase, but to hold an allocation that can survive a bear market without forcing a panicked sale, and to keep contributing through both phases rather than trying to time entries and exits.
How PriLytics helps. PriLytics tracks your portfolio's value against a benchmark over any period you choose, so you can see exactly how your holdings behaved through past market cycles rather than relying on memory. Compare against a benchmark.