Understanding Bull & Bear Markets

Google+ Pinterest LinkedIn Tumblr +

What Drives Bull and Bear Markets?
What causes bull and bear markets? They are partly a result of the supply and demand for
securities. Investor psychology, government involvement in the economy and changes in
economic activity also drive the market up or down. These forces combine to make investors bid
higher or lower prices for stocks.
To qualify as a bull or bear market, a market must have been moving in its current direction (by
about 20% of its value) for a sustained period. Small, short-term movements lasting days do not
qualify; they may only indicate corrections or short-lived movements. Bull and bear markets
signify long movements of significant proportion.
There are several well-known bulls and bears in American history. The longest-lived bull market
in U.S. history is the one that began about 1991 and is still climbing. Other major bulls occurred in
the 1920s, the late 1960s and the mid-1980s. However, they all ended in recessions or market
The best-known bear market in the U.S. was, of course, the Great Depression. The Dow Jones
Industrial Average lost roughly 90 percent of its value during the first three years of this period.
There were also numerous others throughout the twentieth century, including those of 1973-74
and 1981-82.


About Author

Leave A Reply