Bull Market vs Bear Market: What They Mean

A bull market is a stretch of rising prices and optimism; a bear market is a sustained fall of pessimism. These two words describe the overall mood and direction of the market.

The quick definitions

A bull market is a period when prices are generally rising and investors feel confident. A bear market is the opposite: prices are falling and caution or fear dominates.

These terms usually describe a whole market — a market index like the S&P 500 or S&P/TSX Composite — rather than a single stock, though people apply them loosely to individual stocks and even whole sectors.

The 20% rule of thumb

There's no official committee that declares these, but a widely used guideline is:

• A bear market is commonly defined as a drop of 20% or more from a recent high, sustained over time.
• A bull market is the recovery and extended rise that follows, often measured as a 20%+ climb from a recent low.

A smaller dip of about 10% is usually called a correction — uncomfortable, but milder than a full bear market.

Why "bull" and "bear"?

The popular explanation points to how each animal attacks: a bull thrusts its horns upward, matching rising prices, while a bear swipes its paws downward, matching falling ones. Whatever the true origin, the imagery stuck, and today "bullish" simply means optimistic and "bearish" means pessimistic.

What each phase tends to feel like

In a bull market

Rising prices, growing confidence, strong economic news, and often heavy buying. The risk is that optimism can tip into overconfidence, pushing prices far above what businesses are really worth — a setup that has preceded past bubbles like the dotcom bubble.

In a bear market

Falling prices, nervous headlines, and fear that can feed on itself. Bear markets are painful, but historically they have not lasted forever. Major examples include the 2008 financial crisis and the sharp, brief 2020 COVID crash.

How investors relate to the cycle

Markets have historically moved through repeating cycles of bull and bear phases, though the length and depth of each varies enormously and past patterns never guarantee future ones. Because the timing of turns is so hard to call, many long-term investors focus on staying diversified and thinking in years rather than reacting to every swing. Others study why stocks move to better understand what's driving a given phase.

The takeaway: "bull" means up and hopeful, "bear" means down and fearful. They're vocabulary for describing market conditions — useful for reading the news, but not a crystal ball for what comes next.