What Is a Bull Market?
Everything looks peachy during a bull market; everything looks peachy — the economy is doing great, stock prices are high, and unemployment is low. What more could you ask for?
Technically, a bull market is defined as a time when prices rise — generally by 20% or more.
It’s a time when investors see their investments skyrocket in value and can find the most opportunities for profit-making since everything is booming. Sounds amazing, right?
Unfortunately, the good times can’t last forever. On average, bull markets last between four to 11 years, although they can be over as quickly as a few months.
What Is a Bear Market?
The mechanisms here are very similar to those found in a bull market, except that everything happens in reverse: prices decline, so more investors sell, resulting in prices to continually declining.
This might all sound like a disaster for investors, but that isn’t necessarily true — because just like bull markets, bear markets can’t last forever, meaning they offer a unique opportunity to make money.
Understanding Bull Markets and Bear Markets
Bull and bear markets shouldn’t be looked at in isolation — they both form part of the economic cycle.
As we’ve discussed already, bull and bear markets can refer to any kinds of investments, assets, or commodities. So, at any given moment, there may be a bull market for cryptocurrencies yet a bear market for stocks.