What Is a Bull Market? Causes and History

What Is a Bull Market?

By Matthew Frankel, CFP – Updated Feb 22, 2025 at 9:50 AM EST

Key Points

A bull market is defined by a 20% rise in stock prices following a 20% decline.
During bull markets, economic indicators like GDP growth and job creation rise.
Investor strategies like dollar-cost averaging can optimize gains in bull market periods.

Broadly speaking, a bull market is a sustained period -- usually months or years -- when prices rise. The term is most commonly used in reference to the stock market, but other asset classes can have bull markets as well, such as real estate, commodities, or foreign currencies.

Loading paragraph...

bull figurine next to positive trending graph — Source: Getty Images

Loading image...

What exactly is a bull market?

Usually, a bull market marks a 20% rise in stock prices, which follows a previous 20% decline and is followed by another 20% decline. As you can see from the chart below, there was a bull market that began in 2003 and ended when the S&P 500 hit its peak in 2007.

Loading paragraph...

Loading image...

But there's one important caveat: The dates of a bull market can only be known in retrospect.

Characteristics of a bull market

There are several things that tend to accompany a bull market. For starters, they generally happen during periods when the economy is strong or strengthening. Bull markets are often accompanied by gross domestic product (GDP) growth and falling unemployment, and companies' profits will be on the rise.

Additionally, one of the best non-numerical indicators for a bull market is rising investor confidence. During these times, there is a strong overall demand for stocks, and the general "tone" of market commentary tends to be positive. And, because companies can get higher valuations for their equity, we tend to see high levels of initial public offering, or IPO, activity in bull markets.

The opposite of a bull market is a bear market, which is typically defined as stocks falling by 20% or more from a recent peak. Bear markets are often accompanied by recessions, falling investor confidence, and declines in corporate profits.

Learn more: Bull vs. Bear Market

Loading paragraph...

How to invest in a bull market

Regardless of what the market is doing, you should maintain a long-term focus to cultivate long-term wealth. While it can be a smart idea to invest when stocks are cheap, it's unwise to try to time the market. Great long-term businesses can be found in any market.

Loading paragraph...

One smart thing to do is learn the principle of dollar-cost averaging. This involves investing equal dollar amounts at specific time intervals, which can help you invest during a bull market while allowing your portfolio to benefit from corrections and crashes as well.

Loading paragraph...

Historic bull markets

As an example, consider the 2009-2020 bull market, which was the longest in stock market history. After plunging as a result of the 2008 financial crisis, the S&P 500 bottomed out in March 2009 and then proceeded to climb until early 2020 when the COVID-19 pandemic sent stocks crashing.

Loading paragraph...

Loading image...

Related investing topics

How to Invest in Index Funds: A Beginner's Guide

Index funds track a particular index and can be a good way to invest. Get a fast introduction to index funds here.

How to Invest Money: A Step-by-Step Guide to Getting Good Returns

Before you put down hard-earned cash, start with a basic understanding of how investing works -- and how to avoid rookie mistakes.

Recession-Proof Stocks: Industries That Thrive During Recessions

Some industries do well when the economy goes south. Here's how to recession-proof your portfolio.

Accounts That Earn Compounding Interest

Interest compounds when interest payments also earn interest. Learn how to get compounding interest working for your portfolio.

Loading hub_pages...

Prior to the latest one, there was a lengthy bull market that lasted from 2002 until the late-2007 bear market that coincided with the financial crisis. The bottom line is that bull markets tend to be several years in length and are always preceded by and ended by bear markets.

About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst specializing in the real estate and financial sectors. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, Globe St, The National Desk, and other TV networks and publications for his real estate, financial, stock market, and investing expertise.

TMFMattFrankel

@MattFrankelCFP

The Motley Fool has a disclosure policy.