Q

What are bull and bear markets?

A

They refer to markets in which stock prices are generall rising or falling, respectively.

Bull and bear markets are, respectively, market conditions in which stock prices are by and large rising, or falling. Bull markets are often accompanied by overall good economic news — high employment levels and confidence about the economy, random trumpet fanfares heard throughout the land, whereas bear markets come with bleak conditions, like rising unemployment, and sad trombones aplenty.

Over time, the terms have come to refer to specific people; those who sell stocks anticipating a price drop have become known as bears, and those who buy with confidence that someone will pay a higher price in the immediate future have become known as bulls. If you can’t get enough of bull and bear talk, the famous dictionary folks offer an in depth explanation of the terms’ etymology featuring famous historical uses by big shot literary figures like Alexander Pope and Daniel Defoe. Though the particulars are totally unofficial, analysts will announce a bear market when prices fall 20% or more from their 52-week high and a bull market when prices rise 20%. As dispiriting as bear markets can be, investors can take comfort in the fact that bull markets on average last five times longer than bear markets.

Wealthsimple is investing on autopilot

Get started in just 5 minutes, and your first $5,000 is managed free.

Learn more