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L.8 · BEGINNER · 2 MIN

Bulls, Bears, and Market Cycles

Markets move in cycles between optimism (bull markets) and pessimism (bear markets). Understanding these cycles helps you stay rational.

Quiz · 5 questions ↓
§ 01
Bull MarketBear Market
DefinitionSustained 20%+ rise from a lowSustained 20%+ decline from a peak
Average durationRoughly 5-6 yearsRoughly 12-14 months
Typical gain/lossWell over 100% gains30-35% decline
Investor moodOptimism, risk-takingFear, selling pressure
§ 02

Every bear market in history has eventually been followed by a new bull market. The challenge is staying invested through the fear.

§ 03
In the **Markets** view, check the current market indicators. Is the overall trend bullish or bearish?
§ 04

Time in the market beats timing the market. Staying fully invested through cycles has historically produced roughly 10% annual returns (varies by source and time period).

§ 05
The S&P has risen 25% in 6 months. A bull-market narrative dominates the headlines. Based on cycle thinking, what is the most disciplined response?
Five questions · AI feedback

Sit with the ideas.

The S&P 500 has fallen 22% from its all-time high. What is this called?

Why:

Other lessons in this course.

  1. 01What Is a Stock?
  2. 02How Stock Exchanges Work
  3. 03Sectors: How the Stock Market Is Organized
  4. 04Market Cap: Small, Mid, and Large
  5. 05Dilution: When Your Slice of the Company Shrinks
  6. 06What Moves Stock Prices?
  7. 07Dividends: Getting Paid to Own Stocks
  8. 08Bulls, Bears, and Market Cycles— reading now
  9. 09Reading a Stock Chart
See it on a real ticker →