10 Things You Should Know About A Bull Market

Like sunshine after rain, up markets have always followed down markets. Here’s what you need to know about rising "bull" markets.

1) What is a bull market?

A bull market is a period of upward-trending prices. A new bull begins once prices rise at least 20% off the most recent market bottom. Generally speaking, optimism is high and investors and consumers feel confident, pushing company earnings and stock prices higher. 

2) Apples and oranges

Though they often move similarly, the stock market and the economy aren’t the same. The stock market is a forward-looking indicator, so it reflects investor expectations for the next year or so rather than the current economic environment. This means stocks can rise even if the economy is sluggish.

3) Bulls go bigger

Both bull and bear markets are normal and common. The S&P 500 Index has experienced 27 of each since 1928 (Figure 1). Bull markets typically last longer than bear markets. On average, bull markets have gained 115% over 2.7 years while bear markets have lost 35% and lasted less than a year.

4) Are we in a bull market? 

Yes! Markets have been in an upward trend since their lows in October of 2022. Markets recently hit an 18-month high on Friday, January 19th.

5) Bulls are strongest out of the gates

Historically, the first half of a bull has outperformed the second half (in 20 out of 27 bulls since 1928, so about 74% of the time).

6) Snoozing may mean losing

Since a new bull is only identifiable once it’s under way, you could miss many of the market’s strongest days if you wait for the right time to invest. Historically, the first month of a new bull has gained an average of 13.6% and a new bull has risen 25.3% on average in the first three months.

7) All shapes and sizes

The longest bull on record ran for more than 12 years (1987-2000) and rose by a whopping 582%. Conversely, the shortest one lasted 25 days (June 1931) yet generated a return of 27%.

8) Stronger today than yesterday

Overall, the S&P 500 Index has gained 114% on average during bull markets and has been getting stronger since the 1970s. Of the 27 bulls since 1928, the 18 before 1970 gained about 78% on average. The nine bulls after 1970 gained 186% on average.

9) Don’t let it psych you out 

Bull markets can set new records constantly. Attempting to time the market and sell high could also mean missing out on significant further gains.

10) How can I make the most of a bull market?

In our work together, it is important to keep a long-term perspective and stick to your individualized financial plan. Our investment team carefully and actively monitors and makes investment selections to protect and advance our client's best interests.

S&P 500 Index Bull Markets By The Numbers

  • Since 1928, there have been 27 bull markets
  • Average gain: 114.9%
  • Average length: 992 days or 2.7 years
  • Longest bull: 1987-2000 (582% gain); second longest; 2009-2020 (400% gain)
  • The first half of a bull has outperformed the second half 74% of the time (20 out of 27 bulls) by an average of 9%
  • The average gain during the first month of a new bull market: 13.6%
  • The average gain during the first 6 months: 27.4%

If you have specific questions or would like to discuss your own investment strategy or financial planning needs, we welcome you to call us at 302.234.5655 or email us at contactus@covenantwealthstrategies.com to set up time to discuss further.

All investing involves risk, including loss of principal. Indexes are not investments, do not incur fee and expenses and are not professionally managed. It is not possible to invest directly in an index.

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax situation with a qualified tax advisor. The charts above are for illustrative purposes only.

Source: Ned Davis Research, 6/23

S&P 500 Index is a market capitalization-weighted price index composed of 500 widely held common stocks. Diversification does not ensure a profit or protect against a loss in declining market. This material is provided for educational purposes only.