How does a bull market start?
Bull markets generally take place when the economy is strengthening or when it is already strong. They tend to happen in line with strong gross domestic product (GDP) and a drop in unemployment and will often coincide with a rise in corporate profits.
Declining unemployment rate: Bull markets are often marked by a declining or low unemployment, and as people have money to spend, they drive corporate profits higher. Growing economy: Bull markets also tend to coincide with periods when the economy is growing, including positive signs among key economic indicators.
Generally, a bull market occurs when there is a rise of 20% or more in a broad market index over at least a two-month period.”
3. How long the average bull market lasts. As much as investors would like the answer to this question to be "forever," bull markets tend to run for just under four years. The average bull market duration, since 1932, is 3.8 years, according to market research firm InvesTech Research.
A bull market (aka a bull run) is a long, extended period in the market when overall stock prices are on the rise. "Bull markets happen when the economy is strengthening, and stock prices are rising," says Teresa J.W. Bailey, CFP and senior wealth strategist at Waddell & Associates.
- Moving Averages and Crossovers. Moving Averages. ...
- Bollinger Bands. Bollinger bands are a widely used tool in technical analysis. ...
- Moving Average Convergence Divergence (MACD) ...
- RSI Weakness: ...
- Cup-And-Handle Pattern.
Or people who check too often get concerned because they see negative numbers, they see their balance going down and those people can start to feel maybe overly nervous about holding stocks. So they'll back away from stocks and they'll sell their stocks at a time when prices are down, which is not what you want to do.
With stock indexes at all-time highs, it seems we are in the midst of a new bull market. While much of the market's recent gains have come from a handful of stocks, the rally has begun to broaden in recent months. Expectations of an earnings rebound in 2024 suggest earnings could continue to drive the market higher.
Bull markets tend to last longer than bear markets, in part because stock prices tend to trend upward over time. In other words, bull markets historically have lasted a median of twice as long as bear markets—and have seen prices rise more than double what they have tended to fall in bear markets.
Benefits of investing during a bull market
Increased portfolio value: As asset prices increase, the value of investment portfolios generally rises. This can boost overall portfolio performance and net worth.
What ends a bull market?
A bull market ends when stocks fall 20 percent below their last high — a period known as a bear market. The last time the S&P 500 entered a bear market was in 2022, as investors recoiled in the face of stubborn inflation and rising interest rates.
| Bull Market Period | Duration | Total S&P 500 Return |
|---|---|---|
| October 2002 to October 2007 | 60 months | 1.015 |
| March 2009 to February 2020 | 132 months | 4.005 |
| March 2020 to January 2022 | 21 month | 1.144 |
| October 2022 to present | 10 months | 0.248 |
Investing in bull and bear markets
Having a higher allocation of stocks is optimal in a bull market, where there's more potential for higher returns. One way to capitalize on the rising prices of a bull market is to buy stocks early on and sell them before they reach their peak.
However, as a singular event, the stock market crash itself did not cause the Great Depression that followed. In fact, only approximately 10 percent of American households held stock investments and speculated in the market; yet nearly a third would lose their lifelong savings and jobs in the ensuing depression.
The average Bull Market period lasted 6.6 years with an average cumulative total return of 339%. From when the index closes at least 20% down from its previous high close, through the lowest close reached after it has fallen 20% or more. Source: First Trust Advisors L.P., Bloomberg.
A bull market is a period of time in financial markets when the price of an asset or security rises continuously. The commonly accepted definition of a bull market is when stock prices rise by 20%.
As mentioned above, a bullish trend can be identified if a price is making higher highs and higher lows. Lower highs and lower lows determine a bearish trend. This is also known as trend identification based on price action.
The worst thing you can do to your 401(k) is to cash out if the market crashes. Market downturns are generally short and minimal compared to the rebounds that follow. As long as you hold on to your investments during a bear market, you haven't lost anything.
The odds are the value of your retirement savings may decline if the market crashes. While this doesn't mean you should never invest, you should be patient with the market and make long-term decisions that can withstand time and market fluctuation.
| Fund | Expense Ratio | 10-year average annual return |
|---|---|---|
| Fidelity Nasdaq Composite Index Fund (FNCMX) | 0.29% | 15.7% |
| Fidelity Growth Discovery Fund (FDSVX) | 0.67% | 15.8% |
| Vanguard Growth Index Fund (VIGAX) | 0.05% | 14.7% |
| Fidelity 500 Index Fund (FXAIX) | 0.015% | 13% |
Will 2024 be a bear or bull market?
History says the S&P 500 will rise in 2024, and continue moving higher into 2028. The S&P 500 has barreled through 10 bull markets (excluding the current one) since it was created in 1957. Those events have generally been defined by sustained upward momentum across the index.
Has a new bull market already begun? Some investors would say yes, with the S&P 500 Index well over the popular threshold for a bull run of a 20% gain from a trough. However, the index only recently finished recouping its bear-market losses and today sits just slightly above its January 2022 peak.
The duration of bear markets can vary, but on average, they last approximately 289 days, equivalent to around nine and a half months. It's important to note that there's no way to predict the timing of a bear market with complete certainty, and history shows that the average bear market length can vary significantly.
It's likely that, if you invest in a bear market, you will at first sustain some losses that will test your nerve. Conversely, if you take profits as markets are rising, you will often see prices rise further after you have sold. However, with a long enough time horizon, you should expect to see positive results.
Buy dividend stocks
Another way to hedge against bear markets is to invest in stocks that pay dividends over those that do not. Dividend-paying stocks usually outperform non-dividend-paying stocks — typically with less risk, according to 2022 research from Johnson Asset Management.
