Glossary
Bull Market
A bull market is a sustained rise of 20% or more from a low, measured on the S&P 500 and dated after the fact by S&P Dow Jones Indices. Post-war bulls have averaged roughly five years, and every one of them felt permanent while it ran.
What it is
A bull market is a prolonged rise in prices, informally defined as a 20% gain from a recent trough without an intervening 20% decline. There is no official body that declares one. S&P Dow Jones Indices dates the cycles on the S&P 500, and the label is applied after the fact, usually long after the gain. Since World War II, US bull markets have averaged roughly five years with gains well above 100%. The longest, 2009 to 2020, ran eleven years and roughly 400%.
The label describes price, not health. Bull markets carry the compounding that long-term returns are made of. They also carry the psychology that damages it: euphoria, recency bias, and the quiet drift toward concentration as winners compound. Every bull market in US history has been followed by a bear, and every bear by another bull. That alternation is the only prediction in this definition that has never missed.
Key takeaways
- A bull market is a 20%-plus rise from a trough, dated by S&P Dow Jones Indices after the fact.
- Post-war bulls have averaged roughly five years; 2009-2020 ran eleven and about 400%.
- Bulls provide the compounding long-term returns are made of; missing them resets the math.
- The psychology is the hazard: euphoria, concentration drift, and recency bias all peak near tops.
- Every bull in US history has been followed by a bear; the cycle has never missed.
How it works
The mechanics are compounding running uninterrupted. Earnings grow, multiples expand as confidence builds, and reinvested dividends buy shares at rising prices; the sequence can run for years because nothing forces a reversal. The 2009-2020 bull compounded a $100,000 investment into roughly $500,000, and the years that felt most dangerous were mostly the ones that paid best.
The drift is the quiet mechanic. A portfolio set at 60% stocks and 40% bonds does not stay there through a bull: five years of equity outperformance drifts it toward 70/30 without a single decision being made. The risk rises mechanically while the confidence to hold it peaks, which is why the end of a bull market is usually preceded by the most comfortable stretch of it.
Participation is the arithmetic that matters. Per S&P Dow Jones Indices, US markets have risen in roughly three of every four years since 1926, and the best days cluster near the worst ones. Being out of the market during the bull is the error the bull market is quietly measuring, and the data says the cost is not recoverable by cleverness.
Why it matters
Bull markets are where long-term plans are funded: the years that pay for retirement happen inside them. They are also the years when contributing feels optional because everything is rising. The investors who compound through them are the ones who set the machinery up in a bear market and left it alone.
I watched a colleague named Brent (yes, that Brent) watch a bull from the sidelines for three years, waiting for a proper crash. He then invested everything at the euphoria peak because the market clearly only goes up. He bought the top of the psychology, not the top of the market, and the next eighteen months tested him on both.
The highest-leverage thing most Americans can do is automate contributions through every phase of the cycle. Rebalance on a calendar, which mechanically sells a little euphoria and buys a little fear. Check the drift with the portfolio rebalancing calculator and project the compounding with the investment calculator.
Real-world examples
The 2009-2020 bull in dollars
The S&P 500 rose roughly 400% from the March 2009 low to the February 2020 peak, eleven years of compounding. A $100,000 investment at the low was worth roughly $508,000 at the peak. An investor who waited until March 2011 for certainty entered at roughly double the price and captured roughly $256,000 on the same money. Two years of caution cost about $250,000 of the outcome. The market did not announce the low; it was only visible from 2013 onward, which is the problem with waiting for visibility.
The drift through a five-year bull
A 60/40 portfolio left alone through a bull in which stocks gain 60% and bonds gain 10% drifts to roughly 69/31. The risk is nine points higher with no decision made, and the rebalance back to 60/40 sells the winners into the strength. The drift is the bull market's quiet edit of your risk, and the calendar is the counterweight. An investor who rebalances every January has made the same trade, on schedule, without ever once having to guess where the cycle stands.
The three-of-four-years arithmetic
Since 1926, US markets have risen in roughly three of every four calendar years. Sitting out one year waiting for a correction costs the compounding of a year the odds said would rise. The odds do not guarantee the year; they price the waiting, and the price is usually higher than the correction being avoided. The 2023 and 2024 back-to-back gains of roughly 25% each are the recent version of the same lesson, delivered to everyone who spent those years in cash.
Common mistakes
Mistake: Waiting out a bull for the perfect entry.
Why it bites you: Markets rise in roughly three of four years, so the waiting is usually more expensive than the correction being waited for, and the entry that finally happens tends to be late.
Mistake: Letting a bull drift the allocation.
Why it bites you: Five years of equity outperformance turns 60/40 into roughly 69/31 with no decision made, and the risk peaks exactly when comfort does.
Mistake: Confusing a bull market with skill.
Why it bites you: Rising prices make every strategy look brilliant; the bear market audits the difference between the ride and the rider, and the audit is never flattering.
Mistake: Quitting a job to trade full-time near the top.
Why it bites you: Bull markets are when day trading looks like a career; the outcomes data on that decision is the least flattering in finance, with most accounts underperforming a savings rate.
Ivy's take
I spent an evening with the cycle tables dating every post-war bull and bear so you do not have to, and the summary is that bulls are the boring miracle: years of unearned-looking gains that reward exactly one behavior, which is staying invested while feeling slightly ridiculous. The psychology is the tax. Brent paid it in full, buying at peak confidence after waiting out peak value.
I automate contributions on the first of the month and rebalance once a year, which means I sell a little of every euphoria and buy a little of every panic without either requiring my opinion. The bull market's job is to make me complacent. My calendar's job is to disagree.
Related jargon, defined
- Bear market
- A 20%-plus decline from a peak; the other half of the cycle.
- Correction
- A 10% to 20% decline; the frequent cousin of the bear.
- Market cycle
- The full rotation of bull and bear phases over decades.
- Recency bias
- Assuming the recent trend continues, strongest near cycle peaks.
- Rebalancing
- Restoring target weights, mechanically selling winners and buying laggards.
- Dollar-cost averaging
- Fixed investments on a schedule, indifferent to the cycle.
Frequently asked questions
What defines a bull market?+
A rise of 20% or more from a recent trough without an intervening 20% decline, usually measured on the S&P 500. The label is applied after the fact by S&P Dow Jones Indices, not during the rise.
How long do bull markets last?+
Post-war bulls have averaged roughly five years, with the 2009-2020 bull running eleven years and roughly 400%. The average is a summary of very different cycles, not a schedule.
What comes after a bull market?+
Every bull in US history has been followed by a bear market, a decline of 20% or more, and every bear has been followed by another bull. The alternation is the most reliable pattern in the data.
Should I sell before a bull market ends?+
The end is only visible afterward, and timing out of rising markets has historically cost more than the corrections being avoided. Rebalancing to a target allocation is the disciplined version of the same instinct.
What was the longest bull market in history?+
The 2009 to 2020 bull on the S&P 500, roughly eleven years and about 400% from the March 2009 low. It survived multiple corrections that never reached the 20% line.
Disclaimer: This information is general in nature and does not constitute financial or legal advice. Always consult a qualified professional for your specific situation.
Keep learning
Ivy Sinclair-Wren
Financial Chaos Analyst
Ivy Sinclair-Wren is a Financial Chaos Analyst covering investing, AI, wealth psychology, and the emotional consequences of opening finance apps during market crashes. Based in Melbourne, she specializes in demystifying the US tax code and helping users navigate the intersection of spreadsheet logic and human irrationality.