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Dictionary / The stock market

What Is a Bull Market?

A bull market is a long period when stock prices keep rising. A common definition is a rise of 20% or more from a recent low.

Bull vs bear market

A bull attacks by thrusting its horns up. A bear swipes its paws down. So a bull market goes up and a bear market goes down. The names are old Wall Street slang.

What drives a bull market

Usually a growing economy, rising company profit and confident buyers. Low interest rates help too, because borrowing is cheap and savings accounts pay less, which pushes money into stocks.

Is a bull market good or bad?

For people who already own stocks, it feels great. But long bull markets can make people careless. Prices can rise faster than profit, and the P/E ratios of many stocks climb. That can set up a harder fall later.

How to act in a bull market

Keep doing the basics. Spread your money with diversification, invest on a schedule, and avoid buying something only because its price went up. Nobody knows when a bull market will end.

See it in real companies

Open a company to see what it sells and how it makes money.

Related terms

Bear marketA drop of 20% or more from the top. VolatilityHow much and how fast a price moves. S&P 500500 large US companies in one index. DiversificationNot putting all your money in one place. Dollar-cost averagingInvesting the same amount on a regular schedule. P/E ratioHow many years of profit you pay for in a share.

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