What is the difference between a bear market and a bull market?

While bear markets signal a time of pessimism and economic decline, a bull market is defined by optimism and economic growth. A bull market is a period when stock prices are rising and investor sentiment is positive. During a bull market, stocks in a broad market index increase in value by 20% or more.

What causes a bear market?

As growth prospects wane, and expectations are dashed, prices of stocks can decline. Herd behavior, fear, and a rush to protect downside losses can lead to prolonged periods of depressed asset prices. One definition of a bear market says markets are in bear territory when stocks, on average, fall at least 20% off their high.

What is the opposite of a bear market?

The opposite of a bear market is a bull market, where assets, like a bull, are charging. A market correction is often incorrectly used as a synonym for a bear market. The key difference between a bear market versus a market correction is the level of price decline and the duration.

What is the difference between a cyclical and a bear market?

During this period, bear market rallies may occur, meaning it seems prices are heading towards a bull market, whereas it ends up being a market correction phase in an overall declining market. A cyclical, or a short-term bear market, on the other hand, is where prices decrease over a shorter time period, over a few weeks or months.