In plain words: A prolonged period of rising market prices, characterized by optimism and constant asset appreciation.
A bull market describes an extended stretch in which prices climb and optimism prevails. It is often defined as a sustained rise of 20% or more from a recent low, and it can last for years. Bull markets are the counterpart to a bear market, and the two alternate as part of the natural rhythm of investing.
What drives a bull market?
Rising markets are typically supported by a healthy economy: steady growth, strong company earnings, and confident investors willing to buy. As prices rise, optimism can feed on itself, drawing in more buyers. Conditions such as low interest rates can also encourage capital to flow toward riskier assets.
How should a long-term investor treat a rally?
Strong returns can tempt investors to chase performance or abandon their plan, but disciplined investing means staying diversified through every phase. A balanced portfolio is built to participate in growth without betting everything on continued gains. No rally lasts forever, and past performance never guarantees future results.
Key takeaways
- A bull market is a prolonged rise, often 20% or more from a low.
- It is usually supported by growth, earnings, and confidence.
- Discipline and diversification matter even when markets are rising.