Bears can charge, too, but they tend to destroy things, eating, rummaging and generally causing more damage than bulls. Here’s what you need to know about bull and bear markets, including key differences between them. Since World War II, it has taken about two years on average for the stock market to recover, or reach its previous high. The most recent bear market, which started in March 2020, was exceptionally short, ending in August when stocks closed at record highs.

While you should try not to sell during a downturn, a bear market may also provide a reminder to revisit your investing strategy once the market recovers. Even though you know a market recovery will happen, you may realize that your willingness to take on risk is less than you thought. The longest bull market lasted from 2009 to 2020 and resulted in stock growth of more than 400%.

Rebalance your portfolio

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Key differences between bear and bull markets

1. Both bull and bear markets are part of the normal long-term cycle of investing.
2. During the expansion phase of the business cycle, businesses steadily grow their profits as consumer demand for goods and services increases.
3. There are a few strategies to consider when investing in a bear or bull market.
4. That being said, a robust economy—one with low unemployment, increasing wages, healthy levels of consumer spending and production, and moderate inflation—tends to coincide with a bull market.

Bull market conditions can last for decades, and many successful investors have bet very wrongly by trying to predict the end of a bull market. This is one of the great benefits of a market downturn and one of the key differences between bear markets vs bull atfx broker review markets for attentive and astute investors. There’s opportunity, if you know where to look and don’t get scared off by a rampaging bear. When looking at the differences between bear markets vs bull markets, the former is often seen by observers as a decline of 20% from a previous high.

The imagery of bulls and bears as opposing market forces became more prominent with the establishment of formal stock exchanges, particularly in London and later in New York. So when we confront a stock market that’s losing value, we want to jump ship before things get even worse. The fact is, though, that selling your shares when things are at a low ebb may be one of the worst moves you can make.

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Understanding investor lingo is key to grasping the market’s current tone and making smart investing choices. Both bulls and bears are intimidating animals, but in terms of the stock market, How to buy happy coin you’ll generally have luck running with the bulls and keeping your distance from the bears. Bear markets tend to be shorter than bull markets, lasting about 10 to 12 months on average in the S&P 500.

The Origins of the Term “Bearish”

If the stock market is bearish, then you can consider increasing your portfolio’s allocation to bonds or even converting a portion of your portfolio into cash. You can also consider geographically diversifying your holdings to benefit from bull markets occurring in other regions of the world. Growth stocks in bull markets tend to perform well, while value stocks are usually better buys in bear markets. Value stocks are generally less popular in bull markets based on the perception that when the economy is growing, “undervalued” stocks must be cheap for a reason. If you’re investing in stocks for the long term, you will encounter both bull and bear markets on a fairly regular basis. However, if you stay invested through those peaks and valleys, history has shown that you can benefit from significant upside over the long run.