Bull vs Bear Market: What Is the Difference?
Bull markets go up. Bear markets go down. Here is how often each happens and what to do when the bear shows up.
Don't have time? Here's what you need to know:
- 1Bear markets (20%+ drops) happen every 5-7 years and last 12-18 months on average
- 2Bull markets last 4-5 years on average and deliver gains of 150-300%
- 3Keep investing during bear markets — discounted shares produce above-average future returns
- 4Every bear market in S&P 500 history was followed by a recovery to new highs
Bull vs Bear: The Official Definitions
A bull market is a period where stock prices rise 20% or more from a recent low. A bear market is a drop of 20% or more from a recent high. A correction is a drop of 10-20%. These labels are applied retroactively — you only know a bear market started after the 20% decline has already happened. By the time it is official, the worst of the drop may already be over.
Since 1929, the S&P 500 has experienced 27 bear markets and 27 bull markets. Bear markets are shorter and less frequent. Bull markets last longer and deliver bigger gains. The net result: despite regular bear markets, $1 invested in the S&P 500 in 1926 is worth over $12,000 today.
How Often and How Long
Bear markets happen on average every 5-7 years. But they cluster unevenly — there were two in three years (2000-2002 and 2007-2009) followed by 11 years without one (2009-2020). Trying to predict the next bear market is a losing game. Even professional fund managers consistently fail at market timing.
| Metric | Bull Markets | Bear Markets |
|---|---|---|
| Average duration | 4-5 years | 12-18 months |
| Average gain/loss | +150% to +300% | -30% to -40% |
| Frequency | Regular (most of the time) | Every 5-7 years on average |
| Longest | 11 years (2009-2020) | 2.5 years (2000-2002) |
| Recovery time after | N/A | 1-4 years typically |
What to Do During a Bear Market
Keep investing. Seriously — that is the answer. Every dollar you invest during a bear market buys more shares at lower prices. Those discounted shares produce above-average returns when the market recovers. The 2020 bear market (34% drop) lasted 33 days. Investors who kept buying saw their 2020 purchases gain 100%+ within 2 years.
The hardest part is psychological. Your portfolio balance is dropping, headlines are terrifying, and everyone on social media is panicking. The data says hold. Since 1926, every single bear market was followed by a bull market that more than recovered the losses. The investors who lost the most in bear markets were the ones who sold at the bottom.
Important: Do not try to sell before a bear market and buy back at the bottom. Missing just the 10 best trading days over a 20-year period cuts your returns by more than half. Most of those best days occur during or immediately after bear markets.
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Frequently Asked Questions
Should I stop investing during a bear market?
No — the opposite. Bear markets are when you buy shares at a discount. If you invest $500 per month, keep investing $500 per month. The shares you buy at lower prices will produce the best returns in your portfolio when the market recovers.
How do I know when a bear market is over?
You do not — not in real time. Bear markets end with a 20% rally from the bottom, but you only know the bottom was the bottom after the fact. This is why trying to time the recovery is as futile as trying to time the crash. Stay invested throughout.
Should I move to cash during a bear market?
No. Moving to cash means selling at low prices and then needing to decide when to buy back in. Most people who sell during a bear market wait too long to reinvest and miss the recovery. The S&P 500 has fully recovered from every bear market in history — usually within 1-4 years.
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Alex Harrington
CFA Level II Candidate, Finance & Economics
Alex Harrington is an independent ETF researcher and personal finance writer with over 8 years of experience analyzing exchange-traded funds. A CFA Level II candidate with a background in economics, Alex has reviewed 800+ ETFs and helped thousands of beginners build their first investment portfolios through clear, jargon-free education.
This content is for educational purposes only and does not constitute financial advice. Past performance does not guarantee future results. Consult a licensed financial advisor before making investment decisions.