“Bullish” The US experienced one of its most famous bull ...

[Pages:2]What is a Bear/Bull Market? A bear market and/or bull market are terms associated with equity markets. Equity markets have upward or downward trends which are also sometimes called cycles. This FAQ is intended to provide a brief description of what bull and bear markets are.

Bull Market:

A bull market occurs when a market is experiencing positive growth for a considerable amount of time. The term "Bullish" is often used when investors are optimistic about the future values of a market. This usually increases investor confidence and leads to an increase in investments.

The US experienced one of its most famous bull markets during the 1990's. During this period the US experienced positive market growth until the stock market in crashed in the 2001.

There is no official definition of a bull (bear) market, but a commonly used rule of thumb is an increase (decrease) in stock prices of 20 percent or more in a few weeks or months. Others describe a bull market as: "A prolonged period in which investment prices rise faster than their historical average" ( ).

Bear Market: A bear market occurs when a market is experiencing negative growth for a considerable amount of time. The term "Bearish" is often used when investors are pessimistic about the future values of a market. During a bear market most investors have little confidence and may lead to a decrease in investments in a market.

In the US the most famous bear market occurred after the Wall-Street crash of 1929 - The Great Depression. During this period many investors had pessimistic view of the market and expected the market values to continue to decline from 1928 to about 1932.

Dow Jones Price History 1928-1940

Figure 1(page 2) illustrates the pattern of the Dow Jones Index from 1928 to 1940 during Great Depression era. One can see a bear market from 1929 to 1932 followed by a bull market from 1933 to 1937.

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1-Mar-28 1-Oct-28 1-May-29 1-Dec-29 1-Jul-30 1-Feb-31 1-Sep-31 1-Apr-32 1-Nov-32 1-Jun-33 1-Jan-34 1-Aug-34 1-Mar-35 1-Oct-35 1-May-36 1-Dec-36 1-Jul-37 1-Feb-38 1-Sep-38 1-Apr-39 1-Nov-39 1-Jun-40

Figure 1: Dow Jones Industrial Average Index (DJI) 1928-1940

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DJI Close Per Quarter

Source: Figure created from data in the Dow Jones Industrial Average Report, 1990's to Present: Figure 2 displays a bull market during the 1990's and a bear market between 2001 and 2002. Another bear market beginning in September 2008 is also apparent. Figure 2: Figure 1: Dow Jones Industrial Average Index (DJI) 1990- 1st Quarter of 2009

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DJI Close Per Quarter

Source: Figure created from data in the Dow Jones Industrial Average Report, .

Last Updated: March 19, 2010

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1-Mar-90 1-Jan-91 1-Nov-91 1-Sep-92 1-Jul-93 1-May-94 1-Mar-95 1-Jan-96 1-Nov-96 1-Sep-97 1-Jul-98 1-May-99 1-Mar-00 1-Jan-01 1-Nov-01 1-Sep-02 1-Jul-03 1-May-04 1-Mar-05 1-Jan-06 1-Nov-06 1-Sep-07 1-Jul-08

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