Bull Market vs. Bear Market: What They Mean and How to Invest Through Both

Short answer: A bull market is a sustained rise in stock prices; a bear market is a drop of 20% or more from a recent high. Bears feel dramatic, but history says they are the shorter, rarer phase — bull markets have lasted about 2.7 years on average and gained roughly 112%, while bear markets have lasted about 9.6 months and fallen about 35%. For a long-term investor, the practical takeaway is boring on purpose: the market spends far more time going up than down, some of its best days happen in the middle of the worst stretches, and trying to jump in and out usually costs more than it saves.

Whenever stocks are near a record high, the same question tends to come up: how long can this last, and what happens when it turns? The honest answer is that nobody can time the turn — but the history of bull and bear markets is well documented, and knowing the pattern makes the swings a lot less frightening. This guide explains what these terms actually mean, how long each phase has typically lasted, and what the data suggests a long-term investor should do about it.

What exactly is a bull market and a bear market?

The definitions are simpler than the jargon suggests, and they are built around one number: 20%.

A bear market is generally defined as a period when a broad market index falls by 20% or more from a recent high. The SEC investor education site, Investor.gov, describes it as when "a broad market index falls by 20% or more over at least a two-month period," alongside declining prices and pessimistic sentiment (Investor.gov). A smaller drop — in the range of 10% to 19.9% — is called a correction, not a bear market (Hartford Funds).

A bull market is the opposite: a sustained rise in prices, conventionally marked once stocks have climbed 20% from a recent low and are broadly trending upward. In practice, a bull market is just the long stretch of gains that runs between two bear markets.

The names are old Wall Street shorthand. One common explanation is that a bull attacks by thrusting its horns *up*, while a bear swipes its paws *down* — a rising market is "bullish," a falling one "bearish." The labels are memorable, but the 20% line is what actually separates an ordinary dip from a genuine bear market.

How long do bull and bear markets actually last?

This is where the history gets reassuring, because the two phases are not evenly matched.

According to Hartford Funds analysis of S&P 500 history, the average bull market has lasted about 988 days, or 2.7 years, and stocks have gained about 112% on average over that span. The average bear market, by contrast, has lasted about 289 days, or roughly 9.6 months, with stocks losing about 35% on average (Hartford Funds).

Put those side by side and the shape of the market becomes clear: the up phases have historically been about three times longer than the down phases, and the average gain in a bull market has more than made up for the average loss in a bear market. That does not mean any single bull or bear will match the average — some bears have been shorter and milder, others deeper and longer — but the long-run tilt has been decidedly upward.

How often do bear markets happen, and how bad do they get?

Bear markets are a normal, recurring feature of investing — not a sign that something is broken.

Since 1928, the S&P 500 has gone through 27 bear markets and 28 bull markets, which works out to a bear market roughly every 3.5 years on a long-term average basis (Hartford Funds). Notably, they have become less frequent over time: between 1928 and 1945 a bear market arrived about every 1.5 years, while since World War II they have shown up about once every 5.1 years.

The important reframe is that a bear market is the price of admission, not a surprise. If you invest for decades, you should expect to live through several of them. Knowing they average under a year and have historically been followed by a longer, larger recovery is what makes them possible to sit through.

Why does "waiting it out" usually beat "getting out"?

The instinct during a bear market is to sell and wait for calmer skies. The data is unusually pointed about why that tends to backfire.

The market best days have a habit of clustering right in the middle of its worst stretches. Hartford Funds found that about 42% of the S&P 500 strongest days in the last 20 years occurred during a bear market, and another chunk came in the first two months of a new bull market — before it was obvious the bottom had passed (Hartford Funds). An investor who sells after a big drop and waits for the "all clear" is standing on the sidelines precisely when many of the biggest rebound days arrive.

Because those recovery days are so concentrated and so hard to predict, missing even a handful of them can meaningfully drag down long-run returns. This is the origin of the well-worn phrase "time in the market beats timing the market." It is not a slogan to make you feel better about losses — it is a description of how the strongest days actually distribute themselves through a cycle.

What should a long-term investor actually do?

None of this is a prediction about where stocks go next, and it is not a green light to ignore your own situation. But a few durable principles follow from the history.

Match your risk to your time horizon. Money you will need within a few years generally should not ride the full swing of the stock market; that is what savings and short-term bonds are for. Money you will not touch for a decade or more has time to sit through several bull-and-bear cycles.

Keep contributing on a schedule. Investing a fixed amount at regular intervals — sometimes called dollar-cost averaging — means you automatically buy more shares when prices are low and fewer when they are high, without having to guess the timing. It also removes the temptation to stop investing exactly when stocks go on sale.

Expect bear markets instead of fearing them. A downturn roughly every few years is the normal texture of a long-term chart, not evidence that the plan has failed. The households that do best through them are usually the ones who decided in advance that they would not sell in a panic.

Keep an emergency fund separate from investments. A cash cushion is what lets you leave your long-term money alone during a bear market, because you are not forced to sell stocks at a low to cover a surprise bill. (See our guide on how to build an emergency fund.)

None of this requires predicting the top or the bottom — which is fortunate, because decades of data suggest almost no one can do that reliably.

FAQ

What percentage drop makes it a bear market?

A decline of 20% or more from a recent high in a broad market index. A drop of 10% to 19.9% is called a correction, not a bear market.

How long do bear markets usually last?

Historically, about 289 days on average — roughly 9.6 months — with an average decline of about 35%, according to Hartford Funds analysis of S&P 500 history. Individual bear markets have varied widely around that average.

How often do bear markets happen?

Roughly every 3.5 years on a long-term average basis since 1928, though they have become less frequent since World War II, arriving about once every 5.1 years.

Should I sell my investments during a bear market?

There is no one-size-fits-all answer, and this is not advice for your situation — but history shows many of the market best days occur during bear markets and early recoveries, so investors who sell and wait often miss the rebound. Your time horizon and cash needs matter more than the headlines.

Is now a good time to invest if the market is at a record high?

Records are common in a rising market, and by definition every new high once looked like a peak. Rather than trying to time it, most long-term investors focus on a consistent schedule and a mix of assets suited to when they will need the money.

Sources

Investor.gov (U.S. SEC) — Bear Market (glossary)

Investor.gov (U.S. SEC) — Bull Market (glossary)

Hartford Funds — 10 Things You Should Know About Bear Markets

*This is general educational content, not personalized financial advice. Your situation is unique — consider speaking with a qualified financial professional about your specific circumstances.*

TopHolding publishes free, unbiased financial education. No bias. No paywall.