Bull Market

A common rule of thumb defines a bull market as a rise of 20% or more from a recent low, sustained over time. The term is thought to come from the way a bull attacks, thrusting its horns upwards.

Bull markets are typically driven by strong economic growth, rising company profits, low or falling interest rates and investor optimism. They can last for many years. Some of the longest bull markets in history have lasted more than a decade, with occasional smaller declines along the way.

For example, after a major market crash, share prices might rise 25% from their lowest point over the following year, marking the start of a new bull market.

During bull markets, investors tend to become more confident and willing to take risks. Late in a bull market, this optimism can lead to excessive valuations and speculative behaviour, sometimes ending in a sharp correction or crash.

Bull markets are the opposite of bear markets. It is very difficult to predict when one will start or end, which is one reason many investors stay invested through market cycles rather than trying to time them.