Bull vs Bear

The stock market is the polar opposite of the bear market. Bull markets arise when stock prices increase steadily, and they are also followed by high consumer sentiment, low unemployment, and strong economic growth.

A bull market is generally described as a 20% increase from the lows reached in a bear market, but the concept isn't as rigid as a bear market's. Usually, investors mark the beginning of a bull market at the bottom of a bear market. The S&P 500, for example, hit the financial crisis' lows in March 2009, marking the start of a bull market that lasted until early 2020.

To be more specific, two things must happen before a new bull market can be declared: a 20% increase from recent bear market lows and new all-time highs in the benchmark indices. Following the subprime lending crisis, which resulted in many significant bank defaults, the stock market crashed in 2008 after hitting new highs in 2007. The market began to rise after bailouts were announced in late 2008, but it eventually changed course and hit new bear market lows in March 2009.

Bear Market

The difference between a bull market and a bear market rally is a significant distinction. A bull market is a long-term upward trend in stock prices that usually leads to new all-time highs.

A bear market rebound, on the other hand, is an increase in stock prices after the onset of a bear market, but it is just a temporary rise before new lows. Consider how the bear market of 2007-2009 unfolded to visualize this idea.

Bull Market

When a large stock market index rises by at least 20% from a recent low, it is called a bull market. Stock prices slowly rise during a bull market, and investors are hopeful about the stock market's potential success.

Bull markets mean that the economy is strong and unemployment rates are low, which will instill even more trust in investors and generate more income to invest. This has the potential to result in massive growth: During bull markets, stock prices rise by an average of 112 percent.

What to do when it is bullish market or bearish market?

Though bull markets are less stressful, bear markets are more likely to trigger fear and uncertainty. However, how you treat a bear market is determined by your investment horizon.

If you're in your 20s, 30s, or even 40s and planning to save for a long-term target, such as retirement, try to hang on to your stocks and keep saving regardless of the economy. You designed your investment strategies and portfolios for both bull and bear markets in mind if you're investing in a diversified portfolio.

Although it can be tempting to sell your assets to prevent losing more money during a bear market, doing so locks in your losses. You would then make the tough decision of when to return to the stock market.

Instead, see bear markets as opportunities: when you're young, a bear market allows you to profit from lower stock prices until the market recovers. Furthermore, if you use dollar-cost averaging to invest in a security at regular intervals rather than in a single lump sum, you reduce the chance of paying more per share than you would otherwise. In reality, you could end up paying less per share in the long run.