A bull market is a broad market gain of more than 20% that lasts for an extended period of time. The U.S. Securities & Exchange Commission (SEC) stipulates two months as the minimum duration to qualify as a bull market.
During a bull market, stock prices rise and investors are optimistic prices will continue to go up. They can last for months or even years.
Bull markets make investors feel confident about future prospects for their investments and while most commonly used to describe equity market activity, the term can also be applied to bond markets.
The S&P 500, which is the most widely-followed equity index in the world, experienced 24 bull markets between 1928 and January 2022. And, the longest stock market bull run lasted more than 12 years — from 1987 until the Dotcom bust in Q1 2000.
Meanwhile, U.S. Treasury bonds capped off a 40-year bull market in 2021. That’s the longest bull market on record, largely unidirectional and uninterrupted, as bond prices continued to rise while interest rates kept edging lower.
A few hallmarks of a bull market are broad stock market indices on the rise, rising investor confidence, and domestic economic strength.
While there are different ideas on how the term bull market came to be, it’s generally believed that it comes from how a bull positions itself for an attack. A bull gets underneath its prey with its horns and thrusts up to attack, so the term was adapted to describe an upward or rising stock market.
All good things must come to an end though, and bull markets are no exception. Stocks simply cannot go up forever.