A bull market is a condition in the stock market where there is a prolonged period of rising stock prices, typically defined as a sustained increase of 20% or more from a recent low. It is the opposite of a bear market, which is a prolonged period of falling stock prices.
During a bull market, investors are typically optimistic about the future of the economy and the stock market, and they tend to buy stocks, which causes prices to rise further. This can lead to a positive feedback loop where higher stock prices lead to more buying, which leads to even higher stock prices.
Bull markets can be caused by a variety of factors such as economic growth, low unemployment, low interest rates, and positive political and geopolitical events. They can last for months or even years, and can result in significant gains for investors.
It’s important to note that bull markets are a normal part of the economic cycle, and they happen periodically. However, they can be difficult to predict and can be followed by a bear market. It’s also important to note that bull markets don’t affect all stocks or sectors in the same way, some will be less affected or even negatively impacted by it. Additionally, bull markets can lead to overvaluation of certain stocks and assets which can result in a bubble, so investors should be cautious and not get caught up in the hype.