Bull Market
A bull market is a sustained period during which stock prices are rising or are expected to rise, commonly defined as a gain of 20% or more from a recent low in a broad market index such as the S&P 500. Bull markets are typically accompanied by strong economic growth, low unemployment, and high investor confidence.
The term 'bull market' is one of the most recognized phrases in American finance, conjuring images of upward momentum, economic optimism, and rising 401(k) balances. The conventional definition — a 20% or greater rise from a recent trough in a major index — is a rule of thumb rather than a formal regulatory designation. This threshold was chosen to clearly distinguish sustained recoveries from shorter-term 'relief rallies' that can occur even within longer downtrends.
The longest bull market in U.S. history, as measured from the S&P 500's bottom, ran from March 9, 2009, following the Global Financial Crisis, to February 19, 2020, when COVID-19 fears triggered a sharp selloff. Over that approximately 11-year span, the S&P 500 rose more than 400%, from a trough of around 666 points to a peak of 3,386 — a period characterized by ultra-low interest rates set by the Federal Reserve, robust corporate earnings growth, and extraordinary performance from the technology sector. Companies like Amazon, Apple, and Netflix multiplied their market capitalizations many times over during this period.
Bull markets are self-reinforcing up to a point. Rising asset prices increase consumer net worth and confidence, which stimulates spending, which in turn supports corporate earnings. As corporate earnings grow, valuations can justify higher stock prices, attracting further capital into equities. This feedback loop can persist for years. However, as observed historically, extended bull markets can also sow the seeds of excess — valuations become stretched, leverage accumulates, and speculative behavior intensifies, ultimately setting the stage for eventual corrections or bear markets.
Identifying the start of a new bull market in real time is notoriously difficult. After the 34% COVID-19 crash in early 2020, the S&P 500 recovered its losses and hit new all-time highs by August 2020 — a recovery so rapid that some analysts debated whether the brief decline even qualified as an interruption to the prior bull market. The SEC does not define bull markets officially; the designation is a product of convention among market practitioners and financial media.
For educational purposes, it is valuable to study bull markets not just as periods of rising prices but as economic and psychological phenomena. Sentiment surveys, options market data, and credit spreads are all tools that analysts use to gauge the health and sustainability of bull market conditions. Historically, bull markets have been more frequent and longer-lasting than bear markets in the U.S., which has contributed to the case for long-term equity ownership as an element of financial planning.