QWE AI Academy Here’s a detail most explainers skip: the word “bear” in finance didn’t start with an animal swipe. It came from “bearskin jobbers” – middlemen who sold skins they hadn’t caught yet, hoping the price would fall so they could buy cheaper later. That proverb, “don’t sell the bear’s skin before you’ve caught the bear,” is early short selling in plain clothes. The bull showed up later as the natural opposite (Merriam-Webster on the origin).
You open your brokerage app after a choppy month. Your index fund is down 12% from its high. Friends are arguing in group chats. Headlines flip between “healthy pullback” and “end of the bull run.” What you actually need is a clear answer to what is a bull vs bear market – and a way to check it yourself instead of guessing from social media.
Bull vs Bear Market: The Working Definitions
Pros mostly mean this: a bear market is a major index (usually the S&P 500 for U.S. stocks) down 20% or more from a recent peak. A bull market runs the other way – prices rising for a sustained stretch, often tagged once you’re about 20% up from a recent low. Mood follows price: risk-on optimism in bulls, risk-off caution in bears. Fidelity’s explainer uses that framing, with one catch.
The catch is asymmetry. The 20% drop-from-peak rule for bears gets applied pretty consistently. Bulls are looser. Some desks want the 20% rise from a trough; others just call it a stretch of generally rising prices that eventually prints new highs. Same word, two different bars.
| Feature | Bull market | Bear market |
|---|---|---|
| Direction | Sustained rise | Sustained decline |
| Common threshold | ~20% from recent low (or looser) | ≥20% from recent high |
| Typical mood | Optimism, risk-on | Pessimism, risk-off |
| Related term | – | Correction = 10-19.9% drop |
A 12% drop? Still correction territory for most people, not a declared bear. Labels arrive after the move is obvious – no push notification the morning you cross 20%.
How to Check Whether You’re in One Right Now
No fancy software. Index high (or low) and today’s close.
- Pick your benchmark. Broad U.S. stocks → S&P 500. Sector or single-name “bull/bear” tags exist, but the market-wide regime matters more for most long-term portfolios.
- Find the most recent significant peak (potential bear) or trough (potential bull). Free charts on any major broker or Yahoo Finance work. Use the closing price, not an intraday wick.
- Percentage change: (Current – Peak) / Peak × 100. -20% or worse from the peak → classic bear territory. From a trough, +20% is the usual bull confirmation.
- Duration and breadth. One sharp week is not a regime. Check whether most stocks (or equal-weight versions of the index) participate – not just a handful of megacaps.
- Optional second check: another index or the equal-weight S&P. Narrow leadership can make the cap-weighted headline look healthier than the average name.
Major broker outlooks as of mid-2026 still described U.S. equities as the bull that began after the October 2022 lows, chop and concentrated leadership included (Schwab’s U.S. outlook is one public example). That label can flip. Re-run the peak-to-trough math yourself when headlines get loud.
Advanced Angles Most Guides Skip
Secular vs cyclical. Cyclical bulls and bears are the multi-month to multi-year swings in every headline. Secular markets are the longer backdrop – sometimes a decade-plus – tied to demographics, tech waves, or rate regimes. Nasty cyclical bears can sit inside a secular bull (and the reverse). Mix the clocks up and one ugly year becomes a reason to scrap a plan that still fits the long regime. Investopedia’s secular-market definition draws that line cleanly.
Pro tip: When someone says “this bull is old,” ask which clock they mean. Calendar age of a cyclical bull is a weak signal alone. Valuation, earnings growth, and breadth usually beat the birthday.
Bear market rallies. Inside a real bear, prices bounce hard – often 5%+, sometimes for weeks or months – then make new lows. Names you’ll hear: bear market rally, sucker rally, dead-cat bounce. Feels identical to a new bull until it isn’t. Buying the first violent bounce after a 25% drop has a long track record of pain (Investopedia on bear market rallies).
Crypto and high-vol assets. Bitcoin and plenty of altcoins can move 20% in a week. Slap the equity rule on that and every month is a fresh “bull or bear.” Crypto desks usually save the labels for multi-month trends and higher-timeframe structure for that reason.
Turns out a big slice of the market’s best single days land during bears or right as a new bull starts – before anyone feels safe. Hartford Funds, citing Ned Davis Research, puts that share around 42% over a recent 20+ year window. “I’ll buy when it feels calm” is how people miss the turn.
Honest Limitations of the Labels
Shorthand, not physics. The 20% line is a convention. A 19.5% grind that lasts a year can hurt more than a 22% drop that heals in a quarter. Peaks and troughs are usually obvious only in hindsight.
Bears and recessions overlap a lot and still aren’t the same file. Hartford Funds’ count: 27 S&P 500 bear markets since 1928 against 15 official NBER recessions in that span. Pure financial bears without a full economic contraction happen. So does the reverse.
Depth and length jump all over the map from episode to episode. Averages are context, not a kitchen timer – and your result still hinges more on horizon, savings rate, and mix than on nailing the exact day a bull dies. The labels curb emotional trades. They don’t replace a plan.
FAQ
Is a 15% drop a bear market?
No. Practitioners call 10-19.9% a correction. Bear threshold on a major index is 20%+ from a recent high.
How long do bull and bear markets usually last?
Depends on the data set and start/end rules. One Ned Davis Research series used by Hartford Funds (as of their early-2025 bear-market materials) shows average S&P 500 bears around 289 days (~9.6 months) with roughly -35% average declines, while bulls average a few years (~988 days / ~2.7 years in that set). Some bears last a month; some run past a year. Treat the average as backdrop, not a countdown.
Can I be in a bull market for stocks and a bear market for something else at the same time?
Yes. The terms attach to whatever market or asset you measure. U.S. large caps can grind higher while small caps, a bond sleeve, one sector, or crypto run their own bear – or the reverse. “The market” is a fuzzy phrase; name the index. In a diversified portfolio, pieces rarely share one regime on the same day. That’s partly why you diversify.
Next action: open a free S&P 500 chart, mark the highest close of the past two years, and calculate today’s percentage change from that peak. Write the number down. Re-check it the next time headlines get loud. That single habit beats most commentary.