Market moods
Bull vs Bear Market: What's the Difference?
What bull and bear markets are, the common 20% rule of thumb, why they happen, and how beginners can think about them calmly.
Beginner investing lessons and fake-money practice from the maker of Quoliv.
Quick answer
A bull market is a long period when prices are generally rising and optimism is high. A bear market is a period when prices fall significantly—commonly defined as a drop of 20% or more from a recent high—and pessimism spreads. Both are normal parts of market history.
What you’ll learn
- Bull = rising prices and optimism; bear = falling prices and fear.
- A 20% drop from a recent high is a common rule of thumb for a bear market.
- A smaller drop of 10–20% is often called a correction.
- Nobody can reliably predict when one turns into the other.
This explanation is part of our Market Psychology lessons path, where you can explore the idea in short lessons and quizzes.
Where the names come from
A popular explanation is how each animal attacks: a bull thrusts its horns up, a bear swipes its paws down. Whatever the origin, 'bullish' now means expecting prices to rise and 'bearish' means expecting them to fall.
Side by side
| Bull market | Bear market | |
|---|---|---|
| Prices | Generally rising | Falling 20% or more |
| Mood | Optimism, confidence | Fear, pessimism |
| Economy (often) | Growing, low unemployment | Slowing, sometimes recession |
| Common mistake | Overconfidence, chasing hype | Panic-selling at the bottom |
Why markets switch
Prices reflect expectations about the future: company profits, interest rates, inflation, and the economy. When expectations improve, buyers are willing to pay more. When fear rises—because of a recession, a crisis, or rising rates—sellers outnumber buyers.
Historically, bear markets have usually been shorter than bull markets, and broad markets have eventually recovered. But recoveries have sometimes taken years, and past patterns don't guarantee the future.
How beginners can think about them
- Expect both: if you invest for decades, you will likely live through several bear markets.
- Match money to time: money you need soon shouldn't be exposed to a big drop.
- Avoid reacting to headlines: selling after a fall locks in the loss.
- Diversify: a broad portfolio usually falls less than one hyped stock.
You don't need to predict the next bull or bear. You need a plan you can stick with through both.
Sources and methodology
This guide was written for education using the primary sources below. It does not evaluate your finances or recommend an investment. Read our editorial policy.