What is a Bull Market?
What is considered a bull market? A bull market is a condition in which the prices on financial markets are rising or are expected to rise soon. During bull markets, investors are showing optimism, confidence, and positive expectations. It can occur in stock, bond, commodity, FX, real estate, and other markets.
As mentioned in the Raging Bull Trading reviews, most services focus on bull markets.
Although investors hadn't come up with particular metrics or strict conditions that should be met so that we can say we are in a bullish market, there is one universal definition.
For a bull market to form, the stock prices should be moving in an upward trajectory for an extended period of time. A bull market is considered to be close to ending if the stock market records a 20% drop.
A price increase that lasts a few days isn't a bull market. Bullish momentum in stock prices usually lasts for months, years, or even a decade, as we are about to see when we go through the top 3 bull markets in our history.
Top 3 Bull Markets
Over the years, we have witnessed several periods of extended bull markets, most of which lasted for anywhere from 5 to more than ten years. However, there are a few bull markets that stand out in terms of their longevity and returns. Here are the top 3 stock market rallies of all time:
June 1949 - August 1956
- Duration:86 months
Although this isn't the longest, nor the most significant bull market in terms of returns, it is one of the most important in history. The stock markets rally from 1949 is driven by the need to rebuild basically the entire Europe and economies from all around the world.
Aside from that, a new trend, in the face of consumerism, was starting to flourish. People were starting to build houses, have more children, drive automobiles, and have TVs in their homes. This post-war economic boom skyrocketed the prices of the stocks in the S&P 500 with 266%.
The economic boom was so significant that by 1955, investors, economists, and lawmakers were starting to fear from a second Great Depression.
In the second half of the 1950s, several events taking place one-after-another started to diminish the positivity in the markets and eventually led to a bear market rally.
First, it was a rise in the interest rates, followed by the Suez Canal crisis, as well as some local instabilities. As a consequence, the S&P 500 fell 22% from August 1956 to October 1957.
October 1990 – March 2000
- Duration:113 months
This is one of the most favorable periods in terms of economic growth in our history. The bull market that marked the end of the last century was driven by the tech revolution and the Internet bubble.
During the observed period, the S&P 500 rose by 417%. NASDAQ experienced a 518% boom in the period 1990 – 1998, which was followed by a 29% decrease in 1998, and another 255% rise in the years up to 2000.
The end of the Cold War also contributed to the flourishing of the economy. This, combined with the dawn of the Internet Age, instilled unseen positivity in the market participants.
However, it all came to an end when the dot-com bubble burst and a strong bearish market formed. As a result, the S&P 500 nosedived 49% in the period between March 2000 and October 2002.
Despite the ugly end, this particular bull market still remains the strongest one in our history. It was also considered a pivotal event for helping investments become highly popular among the masses as everyone wanted to become an investor and capitalize on the potential of the tech stocks.
March 2009 - March 2020
- Duration:134 months
This period marked the longest bull market streak in our history. These eleven years saw a 348% return in the S&P 500. The bull market came to an end in the period February – March 2020, when the index nosedived by 35%.
It started when the bull and bear markets switched places a few months after the Financial Crisis of 2008 unfolded. It was driven by a period of loosened fiscal policies all around the world, record corporate profits, and, most importantly – the further development of the tech industry. The economic growth during that period was slow but steady.
There were several cases when the last bull market almost came to an, but somehow investors still managed to avoid the crucial 20% drop. In 2015 – 2016 and in 2017 – 2018, it also went through some pauses.
All the positives for the last bull market to become the biggest in the history of financial markets were present until the Coronavirus crisis shut the world down for a couple of months.
All the uncertainty surrounding the global pandemic and its expected longevity, alongside with its implications on the business all around the world brought bear markets back on the menu.
Halted operations, negative GDP forecasts, job losses – all these factors contributed to the end of what was about to be the most significant stock prices rally in our history.
Are we in a bull or a bear market?
There are plenty of expert opinions on the matter, and at the same time, there is no single answer. However, if we should follow the theory, suggesting that a 20% increase from the last lowest point indicates a bull trend is formed, then we should say that the positivity is once again taking over global markets.
Just 11 days after the start of the bear market, the prices of global stocks surged by over 20% and entered the bullish territory. This, at the same time, marked the shortest one of all bear markets in our history.
However, it is worth noting that, with all the surrounding uncertainty, we can't be sure how long this bull market will last, and when will the next bear market take place.
Some Wall Street analysts and investors, for example, avoid calling the current market positive move in prices a bullish one until the S&P 500 doesn't pass its previous high.