- Bull markets are periods of rising stock prices driven by strong economic growth and investor optimism, while bear markets involve falling prices and economic downturns
- Recent examples include the 2009–2020 bull market and the COVID-19-induced bear market in early 2020
- As of September 2025, the market shows signs of entering a new bull phase, with undervalued sectors and expected interest rate cuts supporting growth
- Novice investors should focus on diversification, long-term strategies, and avoiding market timing to navigate both bull and bear cycles effectively
Whether you’re a seasoned investor or just starting out, understanding the difference between a bull market and a bear market is essential to navigating the stock market.
These terms describe broad market trends and can significantly influence investment strategies, risk tolerance, and portfolio performance.
This article is a journalistic opinion piece which has been written based on independent research. It is intended to inform investors and should not be taken as a recommendation or financial advice.
What Is a bull market?
A bull market is a period when stock prices are rising or expected to rise. It’s typically defined as a 20 per cent increase in major stock indexes (like the S&P 500) from a recent low. Bull markets are driven by:
- Strong economic growth
- High investor confidence
- Low interest rates
- Rising corporate earnings
Historical example:
The longest bull market in U.S. history lasted from March 2009 to February 2020, following the Great Recession. During this time, the S&P 500 rose over 400 per cent.
What Is a bear market?
A bear market is the opposite: a period when stock prices fall by 20 per cent or more from recent highs. Bear markets are often associated with:
- Economic recession
- High inflation
- Rising interest rates
- Negative investor sentiment
Historical example:
The COVID-19 pandemic triggered a bear market in March 2020, with the S&P 500 dropping over 30 per cent in just a few weeks before rebounding.
Key differences
| Feature | Bull market | Bear market |
| Market Trend | Rising prices | Falling prices |
| Investor Sentiment | Optimistic | Pessimistic |
| Economic Indicators | Strong GDP, low unemployment | Weak GDP, rising unemployment |
| Investment Strategy | Buy and hold, growth investing | Defensive investing, diversification |
Where are we now? (September 2025)
The current market shows signs of a transition into a new bull market, though risks remain:
- Small-cap and value stocks are outperforming and remain undervalued, with small caps trading at a 15 per cent discount to fair value
- The Federal Reserve is expected to cut interest rates, which historically supports bull market conditions
- The Morningstar US Market Index rose 2.15 per cent in August, with strong gains in value and small-cap segments
- However, tariffs and global trade tensions are distorting GDP figures and could slow economic growth into early 2026
Sector highlights:
- Undervalued: Communications, Real Estate, Energy, Healthcare
- Overvalued: Utilities
Tips for novice investors
- Stay diversified: Spread investments across sectors and asset classes.
- Avoid market timing: It’s nearly impossible to predict tops and bottoms.
- Focus on fundamentals: Invest in companies with strong earnings and growth potential.
- Think long-term: Bull and bear markets are part of the cycle—patience pays off.
Join the discussion: Find out what the Bullboards are saying about stock market performance on Stockhouse’s stock forums and message boards.
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