Bull Market vs Bear Market: Definition, Examples, and The Difference Between Both

A bull market is an occurrence when market prices are rising over a period of time. This can happen across different classes of assets: stocks, bonds, commodities, currencies, and others. A commonly used indicator is when there is a rise of at least 20%, broad enough across the market, over at least a two-month period. Meanwhile, a bear market is its opposite: 20% decline or more over the same window.

Although "bull market" and "bear market" are only general guidelines and not hard rules, these concepts can be helpful for beginner investors in recognizing market trends and sentiments.

What Is a Bull Market? The 20% Rule and Examples

According to Investor.gov, the SEC's investor site, a bull market is a time of rising prices and upbeat investors. In the US, investors usually use broad indexes as a benchmark, such as S&P 500 and Dow Jones Industrial Average. A rule of thumb is a gain of 20% or more in a broad market index, over at least two months. The bear market entry is its opposite: a drop of 20% or more over the same period.

Investors have used the terms "bull" and "bear" since the 18th century, and a popular explanation is how each animal attacks: a bull thrusts its horns upward, while a bear swipes its paws downward. Note that this is only a convention among analysts and investors, not a rule.

There are details which you should also know:

• No specific index: Sites like Investor.gov do not give any specific index as a measure. "Bullish" or "bearish" period on certain index or sector does not necessarily mean a bull/bear market is happening.

• The 20% 'rule': When talking about the "20% rule", there is no absolute point on where the 20% is measured from. Hartford Funds treats a new bull market as beginning once the closing price gains 20% from its low, but this is not a hard rule.

What Drives a Bull Market

While a bull market phenomenon isn't driven by a singular cause, there is a few conditions which tend to show up together:

• Earnings growth: When there is rise in demand (products and services), it lifts company sales and profits. This supports the share prices of publicly traded companies.

• Economic expansion: Growth can lead to more hiring and higher pay, which feeds more spending. Bull markets tend to coincide with strong job markets.

• Easier financial conditions: In December 2008, the Federal Reserve cut its target rate to nearly zero and later bought long-term bonds. One peer-reviewed analysis concluded that this contributed to the stock market's recovery.

• Improving sentiment and money flows: When investors become confident, they are buying more eagerly and holding on longer. This can drive the share prices up.

• Recovery from recession: an example is the US market, where the 2008 financial crisis and 2020 COVID recession were followed by bull market returns.

US Bull Market Examples

This widget below shows data from five bull markets in the US. This is historical data, and does not represent future results.

Different bull market runs have different causes. For example, here are the details on 2009 and 2020 bull markets:

Note: Gains are S&P 500 price returns based on closing levels and exclude dividends. Source: S&P Dow Jones Indices; Federal Reserve. Past performance does not guarantee future results.

How to Tell a Bull Phase in The Market

Here are four of many signs of a bull market. Keep in mind that these indicators can only show where the market is, and not where it is going.

Where the Current US Market Stands

As of October 7, 2026, the S&P 500 closed at 7,801.77, about 118% above the October 2022 low. That makes the run four years old in October 2026, longer than the 988-day average for S&P 500 bull markets since 1928*, though still well short of the roughly 11-year run that followed the 2009 low.

*Source: Hartford Funds, using Ned Davis Research data, S&P 500 price index, 1928 to March 2025.

Is Current Market a Bull? (October 2026)

The index fell by almost 20% from its February 2025 high during April 2025 tariff, and it dropped about 10% between late January 2026 and a March 30, 2026. Neither decline reached 20% on closing basis, so by the common definition, neither became a bear market. But it was close.

This shows the hindsight problem we discussed above: during each dip, investors could not know whether the decline would stop short of 20% or keep going.

Note: Index levels are S&P 500 closing prices and exclude dividends. Source: S&P Dow Jones Indices. Past performance does not guarantee future results.

Bull Market vs Bear Market

Now, what about the bear market? besides looking at the broad price trend of stocks, there is a few other things that contrasts a bear market from bull:

Source: Hartford Funds, using Ned Davis Research data, S&P 500 price index, 1928 to March 2025. Price moves exclude dividends. Bear market dates run peak to trough; bull run dates run trough to the next peak. Historical data for education only, not investment advice. Past performance does not guarantee future results.

How to Invest in a Bull Market vs a Bear Market

Nobody can reliably call when a bull market ends or when a bear market bottoms, because both are only confirmed in hindsight. That is why most long-term approaches keep the same plan through both phases. What changes is which mistakes are most tempting. This section is for education, not investment advice.

What Stays the Same in Both Markets

• Start with your goals and time horizon: Money you may need within the next few years is more exposed to a decline, because a bear market can take time to recover from. Build an emergency fund before you invest.

• Invest on a regular schedule: Dollar-cost averaging means investing a fixed amount at regular intervals, whatever the price. Your fixed amount buys fewer shares when prices are high and more when they are low, so you do not have to time the market. It does not guarantee a profit or protect against losses in a falling market.

• Diversify: Spreading your money across sectors, company sizes and asset classes means your results do not depend on a few stocks.

• Rebalance periodically: Over time, market moves push your portfolio away from the mix you chose. Rebalancing brings it back to your target, for example once or twice a year.

What Changes in Bull vs Bear Market

Historically, US bear markets have been shorter than bull markets. Since 1928, the average S&P 500 bear market lasted about 289 days, against 988 days for the average bull market* (see the comparison table above). This history is one reason many long-term investors stay invested through declines, but past patterns do not guarantee that the next market cycle will behave the same way.
*Source: Hartford Funds, using Ned Davis Research data, S&P 500 price index, 1928 to March 2025.

What a Bull Market Means for Long-term Investors

There are mistakes that investors tend to make during bull market. This section is meant for education, not advice.

Common traps in rising markets:

• Fear of missing out (FOMO): Buying because prices are climbing and others seem to be profiting. Do your research on fundamentals (reading income statements, etc.) before deciding.

• Over-concentration. When a few stocks drive the index gains, such as when AP noted in June 2023 about Nvidia and other big tech names, it’s tempting to load money up on them. This raises the risk when those few stocks fall. Consider diversification and other hedging methods.

• Leverage: Borrowing to invest will bring greater risk of losses. Do not borrow if it surpasses your financial capacity.

Conclusion

A bull market is a sustained rise in stock prices, commonly defined as a gain of 20% or more in a broad index. A bear market is the mirror image, a fall of 20% or more. Beginner investors should be aware that rising markets often invite FOMO, over-concentration, and irresponsible use of leverage.

Risk reminder: investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. This article is for education only and is not investment advice.