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What is a Bull Market? - Definition & Meaning

Instructor: Yolanda Williams

Yolanda has taught college Psychology and Ethics, and has a doctorate of philosophy in counselor education and supervision.

Did you know that a bull market is named as such because bulls attack their opponents by swinging their horns upward? Learn more about a bull market, its characteristics, and how it differs from a bear market. Then test your knowledge with a quiz.

Definition

A bull market is a period of time, usually years, where a market experiences rising prices. But what does this really mean?

Characteristics

When a market is doing well, the prices in that market will increase. This increase in market prices over an extended period of time is called a bull market. When people use the term ''bull market'', they are usually taking about the stock market; however, a bull market can refer to any item that can be traded, such as real estate, currencies, or bonds.

A bull market signifies growth. Bull markets generally occur when the rate of employment is high, there is a strong economy, and there is low inflation. Consumers spend more, which means that businesses experience an increase in profits and contribute more to the economy. Those who invest in the market are confident due to the rising prices and they believe that the market will continue to do well.

With the hopes of obtaining a bigger profit, investors' faith in the market's growth will lead them to buy more shares. However, when a market is doing well, investors who already have shares in that market tend to hold on to them since they are making a profit and they expect prices to continue to increase. This creates a situation in which there is a strong demand for shares, but the supply is low. Because the competition for the few available shares is high, investors are willing to pay more to obtain them, which drives up the prices even more. Investors are willing to pay more because they believe that the shares will bring them a big profit.

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