Are we in a bull market, or has it become a bear? And why do we use those terms to describe the stock markets anyway?
One popular belief is that the terms are based on the animals’ styles of attack. While a bull attacks by thrusting its horns up, a bear attacks by swiping its paws down. These can be likened to market direction, since markets move up, down and sideways.
In bull markets, prices trend up as financial markets show optimism. In bear markets, prices trend down as financial markets show pessimism. Stagnant markets are a result of continual ups and downs, where market gains cancel losses. On average during the past seven decades, bull markets, as represented by the S&P 500 Index, have lasted for less than six years, with average cumulative returns of 265%, and bear markets have lasted for about one year, with average cumulative returns of –33%.*