Bull and Bear Markets

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Bull and Bear Markets

What causes bull markets and bear markets? They are partly a result of the supply and demand for securities. Investor psychology, government involvement aimed at prodding or suppressing economic activity, and changes in economic activity also drive the market up or down. These forces combine to make investors bid higher and higher (or lower and lower) prices for stocks.

How does a market qualify as a bull or bear?

To qualify as a bull or bear market, a market must have been moving in its current direction (by about 20 percent of its value) for a sustained period. Small short-term movements lasting days do not qualify; they may only indicate corrections or short-lived movements. Bulls and bears signify long movements of significant proportion.

Famous bulls and bears in history

There are several well-known bulls and bears in American history. The longest-lived bull market in US history is the one that started in 2009 and ended in early 2020. Other major bulls occurred in the 1920s, the 1950s, the late 1960s, the mid-1980s, most of the 1990s, and the mid-2000s. However, they all ended in recessions or market crashes.

The best-known bear market in the United States was, of course, the Great Depression. The Dow Jones Industrial Average lost roughly 90 percent of its value during the first three years of this period. There were also numerous others throughout the twentieth century, including those of 1973–74 and 1981–82. The twenty-first century had a bear market from 2000 to 2002 and again from 2007 to 2009.