Bull vs. Bear Market: What's the Simple Difference?

If you follow investing for more than a few days, you'll hear the market described as "bullish" or "bearish." These animal terms are a simple, shorthand way to describe the overall mood and direction of the stock market.

Here’s the simple difference:

• Bull Market: The market is going UP. Investors are confident, optimistic, and buying stocks.
• Bear Market: The market is going DOWN. Investors are fearful, pessimistic, and selling stocks.

The Analogy (Why Bulls and Bears?)

The animal names come from the way each animal attacks:

• A Bull thrusts its horns UP into the air.
• A Bear swipes its claws DOWN to attack.

This is the easiest way to remember which is which. Bull = Up. Bear = Down.

What Is a Bull Market? (Confidence)

A bull market is the "good times." It's a long period where stock prices are steadily rising.

• The Vibe: Confident and optimistic. People feel good about the economy, companies are reporting strong profits, and unemployment is low.
• What Investors Do: Everyone wants to buy. The fear isn't about losing money, but about "missing out" on gains. This optimism often feeds on itself—when prices go up, more people get excited and buy, which pushes prices even higher.
• The "Rule": While there's no official rule, people generally call it a bull market once the market has risen 20% from its previous low.

What Is a Bear Market? (Fear)

A bear market is the "bad times." It's a scary, painful period where stock prices are falling for months on end.

• The Vibe: Fearful and pessimistic. The news is filled with talk of a recession, companies are reporting lower profits, and unemployment might be rising.
• What Investors Do: Everyone wants to sell. The fear of "losing more" is all people can think about. This fear also feeds on itself—when prices fall, people panic-sell, which pushes prices even lower.
• The "Rule": A bear market is officially declared when the market has fallen 20% from its recent high.

Head-to-Head: Bull vs. Bear

Why Does This Matter for a Beginner?

As a new investor, you need to know one crucial thing: Both will happen. Many times.

• Bear markets are scary, but they are a normal, natural part of investing. They are the "price of admission" you pay to get the powerful long-term growth of a bull market.
• The worst mistake you can make is selling in a panic during your first bear market.
• The best investors know that bull markets are for making money, and bear markets are for buying great companies "on sale."

Your investing journey will be a long climb up a mountain. The path will have many zigs and zags, but the long-term direction is up. The bull markets are the climb, and the bear markets are the temporary dips.