What is Bull Market? (Plain English Definition)
Definition: A bull market is an extended period of rising stock prices, typically defined as a gain of 20% or more from recent lows.
Bull Market Explained Simply
A bull market is a sustained period when stock prices are rising or expected to rise. The formal definition is a 20% or greater increase from a recent market low. Bull markets are generally driven by strong economic growth, low unemployment, rising corporate earnings, and broad investor optimism.
Bull markets tend to last much longer than bear markets. Since 1950, the average bull market has lasted about 5 years and produced average gains of roughly 180%. The longest bull market in history ran from March 2009 to February 2020 -- nearly 11 years -- during which the S&P 500 gained over 400%.
During bull markets, it can feel like everything is going up and investing is easy. This optimism sometimes leads to overconfidence and excessive risk-taking. Smart investors use bull markets to build wealth steadily while maintaining their target asset allocation, rather than chasing hot trends or concentrating too heavily in the best-performing sectors.
Bull Market Example
The bull market from 2009 to 2020 turned a $10,000 investment in the S&P 500 into approximately $55,000. An investor who consistently invested $500 per month through dollar-cost averaging would have accumulated over $200,000 from just $66,000 in contributions. The bull market rewarded patient, consistent investors handsomely.
Why Bull Market Matters for ETF Investors
Bull markets are where most long-term wealth is built, but they also require discipline. It is tempting to increase your stock allocation during a bull market or chase the hottest performing sectors, but this can leave you overexposed when the inevitable correction arrives. For ETF investors, the key lesson from bull markets is to stay diversified and keep investing consistently. The best strategy is usually the simplest: maintain your target allocation across stock and bond ETFs, continue regular contributions, and periodically rebalance. This approach captures bull market gains while keeping your risk level appropriate for your goals.
Bull Market vs Bear Market
| Bull Market | Bear Market |
|---|---|
| A bull market is an extended period of rising stock prices, typically defined as a gain of 20% or more from recent lows. | See full definition of Bear Market |
While bull market and bear market are related concepts, they serve different purposes in the world of ETF investing. Understanding both terms helps you make more informed decisions about which funds to include in your portfolio and how to evaluate their performance.
Related Terms
Deepen your understanding of ETF investing by exploring these related concepts:
Bear Market
A bear market is a prolonged decline in stock prices, typically defined as a drop of 20% or more from recent highs.
Recession
A recession is a significant decline in economic activity lasting more than a few months, typically defined as two consecutive quarters of declining GDP.
Dollar Cost Averaging (DCA)
Dollar cost averaging is the strategy of investing a fixed amount of money at regular intervals regardless of market conditions.
Portfolio Rebalancing
Portfolio rebalancing is the process of realigning the weightings of assets in your portfolio back to your original target allocation.
If you’re serious about learning ETF investing properly, we recommend this highly-rated Udemy course that teaches a complete selection framework — from picking profitable ETFs to building a recession-proof portfolio. No finance background needed.