Bull market / bear market
A bull market is a sustained period in which prices of shares are rising and confidence is high. A bear market is a sustained period in which prices are falling and pessimism is widespread. The terms describe the broad direction of the market, not a single day.
Where the names come from
The names are an old image. A bull attacks by thrusting its horns upward, a bear by swiping its paws downward. The image is easy to remember, and it is not a measurement.
A rule of thumb, not a law
A common rule of thumb calls it a bear market when a main index has fallen by around 20 percent or more from its recent peak. A bull market is usually described as a rise of a similar size from a low. These thresholds are a convention used by commentators. There is no official definition, so you will see them applied loosely.
Why the labels are only labels
Both phases are recognised mostly in hindsight. Inside a bull market there are falling days and weeks, and inside a bear market there are sharp rallies. Neither phase lasts forever, and nobody can say reliably when one has ended while it is happening.
How people behave in each
In a bull market, rising prices tend to pull in confidence and sometimes overconfidence. In a bear market, falling prices tend to produce fear. Maetis teaches how to keep a steady process in both, not how to predict which one is next.
A fall of about 20 percent (hypothetical numbers)
Suppose an index rises to 20,000 points and then slides to 16,000. That is a fall of 20 percent from its peak, which many commentators would call a bear market. If it later climbed from 16,000 back to about 19,200, a rise of the same 20 percent, they might describe the new phase as a bull market.
Common questions
- What is a bull market?
- A sustained period of rising share prices and high confidence.
- What is a bear market?
- A sustained period of falling share prices and widespread pessimism.
- Is there an official definition of a bear market?
- No. A fall of about 20 percent from a recent peak is a common rule of thumb, but it is only a convention.
- Can anyone tell which market we are in right now?
- Not reliably. These phases are usually clear only afterwards, so a steady process matters more than guessing the label.