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Markets & EconomyGlossary

Bull market

A bull market is a rise of 20% or more in a broad market index, usually over at least two months. Plain-English definition, an example and related terms.

Also called: bull, bullish market

By The Token Thesis Desk2 min read4 cited sources

A bull standing on a rocky hillside
“Charolais cattle, Sierra Nevada, Venezuela” by Wilfredor — CC0 1.0 (edited: cropped, recolored)

Quick answer

A bull market is a period when stock prices are rising and investors are optimistic. Generally, it means a broad market index has risen 20% or more from a low over at least a two-month period.

What does bull market mean?#

Investor.gov describes a bull market as a time when stock prices are rising and market sentiment is optimistic, and says it generally occurs when there is a rise of 20% or more in a broad market index over at least a two-month period[1]. Sentiment is the overall mood of investors; a broad market index tracks a large basket of stocks, as explained in stock market indexes explained.

FINRA's glossary of market terms contrasts it with a bear market and describes a bull market as a large increase in prices[2]. The opposite term is a bear market, a fall of 20% or more.

How is a bull market measured?#

Worked example

An index rises 20% from its low

Suppose a broad index falls to 3,840 and then climbs to 4,608 (illustrative levels). That is a 20% rise from the low, which meets the usual bull-market threshold. If the earlier peak was 4,800, the index is still below that old high — a new bull market can begin before the previous losses are fully recovered.

StepIndex levelChange
Low point3,840—
After the rise4,608+20% from the low
Earlier peak, for comparison4,800Still 192 points higher

Figures computed in code from the stated inputs; rounded to the nearest cent or tenth.

Why should a beginner be careful with the term?#

A bull market describes what has already happened, not what will happen next. Past gains are not a forecast, so a rising market is not a reason to change a plan by itself. FINRA warns that holding a large share of your money in one investment, asset class or market segment exposes you to concentration risk[3].

Stock prices move down as well as up, and there is no guarantee a company will do well[4]. For the side-by-side comparison with bear markets and corrections, read bull vs bear markets, and see diversification for how spreading money out limits concentration risk.

Sources

Numbers in brackets in the text point here. Grade A = primary source (regulator, statistics agency, law or official document).

  1. 1
    Bull Market (glossary)U.S. SEC — Investor.gov (n.d.) · Grade A
  2. 2
  3. 3
  4. 4
    Stocks (FAQs)U.S. SEC — Investor.gov (n.d.) · Grade A

How we checked this note

Every number, date and rule above links to its source. This note cites 4 sources, 4 of them primary (Grade A). Worked examples were calculated in code, and a second editor compared each figure with its source before publishing. Spotted an error? Tell us — corrections are listed on the note. Read our editorial policy.