Bull and bear market — bull market vs bear market
What is a bull market (hossa) and bear market (bessa), how to recognize them and what they mean for investors. Differences, history and strategies.
Definitions
Bull market (bull market / hossa) — a period when asset prices rise by at least 20% from the last trough. It's characterized by optimism, rising employment and economic growth.
Bear market (bear market / bessa) — a period when asset prices fall by at least 20% from the last peak. It's accompanied by pessimism, recession fears and capital flight.
Quick Answer
A bull market (hossa) is a period when asset prices rise by at least 20% from the last trough, marked by optimism and economic growth, while a bear market (bessa) is a fall of at least 20% from the last peak, accompanied by pessimism and recession fears. The names date to the 18th century: a bull attacks upward with its horns, a bear strikes downward with its paw. Since 1926 on the S&P 500, the average bull lasted ~4.4 years returning +155%, the average bear ~1.3 years taking away -36% — which is why buy & hold works.
Where do these names come from?
A bull attacks with its horns from bottom to top — symbolizing rises. A bear strikes with its paw from top to bottom — symbolizing falls. These names have been used on stock exchanges since the 18th century.
How to recognize bull and bear markets?
| Feature | Bull market (bull) | Bear market (bear) |
|---|---|---|
| Price change | > +20% | > -20% |
| Sentiment | Optimism, FOMO | Fear, panic |
| Economy | GDP growth | Slowdown/recession |
| Duration (average) | 4–5 years | 9–16 months |
| Volume | Rising | Falling, then panic selling |
History in the US market (S&P 500)
- 2009–2020 — the longest bull market in history (~11 years, +400%)
- 2020 (COVID) — the fastest bear market (34% drop in 23 days) and fastest recovery
- 2022 — tech bear market (S&P -25%, Nasdaq -33%)
On the Polish WIG20, bear and bull markets tend to be more volatile due to lower market liquidity.
What to do during a bull market?
- Stick to your investment plan
- Don't give in to FOMO (Fear Of Missing Out) — don't buy "because everything is rising"
- Rebalance your portfolio — sell overweight stocks, buy bonds
- Remember: every bull market eventually ends
What to do during a bear market?
- Don't panic and don't sell — historically, markets have always recovered
- Continue regular investments (DCA) — you're buying cheaper
- Consider increasing your stock allocation at the expense of bonds
- Check your emergency fund — is it enough to survive without selling investments?
The most important statistic
Since 1926, the average bull market on the S&P 500 lasted ~4.4 years and returned +155%. The average bear market lasted ~1.3 years and took away -36%. Markets rise much more frequently and for longer periods than they fall — that's why the buy & hold strategy works.
How Freenance can help
Freenance shows your portfolio value over time — you'll see bull and bear markets in your own investments. This helps maintain perspective and avoid making emotional decisions in panic.
👉 Track your portfolio through bulls and bears — freenance.io
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FAQ
What is the standard definition of a bull market?
A bull market is commonly defined as a rise of at least 20% in a broad index from its most recent trough, sustained over weeks or months. It is usually accompanied by positive sentiment, expanding economic activity and broad participation across sectors.
What is the standard definition of a bear market?
A bear market is typically defined as a decline of at least 20% in a broad index from its most recent peak. It tends to coincide with weaker economic data, rising risk aversion and falling earnings expectations, though every cycle has its own drivers.
How long do bull and bear markets usually last?
Historical data from US equity markets shows that bull markets have lasted on average several years, while bear markets have typically been shorter — often around one year — but with steeper monthly losses. Past durations do not guarantee future cycles.
Does a bear market always mean a recession?
Not always. Bear markets can occur without an accompanying recession, for example during sudden shocks or sharp repricing of expectations. Conversely, recessions do not always overlap perfectly with the 20% threshold used to label bear markets.
How should long-term investors respond to bull or bear markets?
Most long-term strategies focus on a consistent plan, diversification and matching risk to time horizon rather than trying to time market regimes. Reviewing your asset allocation, emergency fund and goals is generally more useful than reacting to labels like bull or bear.
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