A bull market is a period where prices keep climbing, fueled by a strong economy and a general sense of optimism among investors.
The name isn’t just randomly given—it comes from the way a bull attacks, thrusting its horns upward into the air. That upward motion is the perfect metaphor for a chart where the line just keeps heading toward the top. Experts don’t call a market a bullish one until an index like the S&P 500 has climbed at least 20% from its recent low and stayed there for a while.
How to Spot One
It is easy to see the signs of a bull market. These signs include a high trading volume, indicating that everyone is eager to participate, robust earnings, indicating that companies are generating profits, and a low rate of unemployment. There is also a loop where optimism becomes contagious: as prices rise, people get FOMO (fear of missing out), they buy in, and that demand pushes prices even higher.
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A bull market does not just happen by accident. Usually, there is a catalyst behind the scenes, such as a major tech breakthrough, business-friendly laws, or—most commonly—the Federal Reserve cutting interest rates. When it’s cheaper to borrow money, businesses expand, and investors move their cash out of boring savings accounts and into the stock market to chase better returns.
The most important thing to remember is that gravity always wins eventually. Bull markets are great, but they are not permanent. Whether it’s because stocks got too expensive, interest rates spiked, or a sudden event caught everyone off guard, the cycle eventually changes. Smart investors enjoy the phase, but they should stay levelheaded.