What’s a bull market and what does it mean for your savings?

Change has been almost constant in the stock market over the past few years, starting with a big drop when the pandemic started. Since then, it’s been a bumpy ride, but the overall direction has been up—which now has people talking about a bull market. We’ll let you know what that means and how you can manage your savings in a changing stock market.

woman sitting at a desk in front of a computer looking at a chart

What’s a bull market?

A bull market is generally defined as when the value of the stock market has increased at least 20% over its previous low point. The opposite is a bear market, which is when the value of the stock market falls by at least 20% from its previous high point. Bull markets often happen after a recession, as the economy recovers and investor sentiment improves.

You’ll find that people tend to be happy about a bull market and unhappy about a bear market. But how you feel about the market shouldn’t guide your investment decisions. If feelings of euphoria cause you to buy stocks in a bull market, you may end up overpaying—just as selling stocks out of stress in a bear market could lock in potential financial losses. Investment decisions should be grounded in an understanding of the market and the investments themselves, and be guided by an appropriate investment

The emotional rollercoaster of the stock market—don’t let emotions guide your decisions

Chart shows that when the market is high, people feel euphoric, and when the market is low, people feel defeated.

For illustrative purposes only

Think about time before investing in a bull or a bear market

Rather than acting on your emotions, think about how much time you have until you need access to your cash. Investing for the long term can handle riskier investments than investing for the short term.

What’s short-term investing?

If you’re saving for a goal that’s less than three years away—such as a new car—you’ll want to consider a short-term investment strategy. You want to be fairly certain that your money will at least have the same value when you need it that it has today. Even if you’re in a bull market today, will it still be a bull market when you sell your investments?

General guidance for short-term financial goals is to invest in more conservative investments in:

What’s long-term investing?

If you’re saving for a goal that’s more than three years away—such as retirement—you may be able to accept more risk in your investments. When you have more time until you need your money, you have more time to ride the bulls and the bears, with the potential of greater growth. You may want to mix up your investments with some funds that have medium risk and potential reward and some with a higher risk/reward profile. And then as you get closer to your goal, you may want to change to more conservative investments to lower your risk. Long-term accounts you might consider for your savings include:


Consider time and ignore the bulls and bears

Of course, not all investments gain 20% in value during a bull market, just as not all investments lose 20% in a bear market. And even the professionals who choose stocks for a living can’t beat the market all the time. Whether you’re in a bull or a bear market, the best strategy is one grounded in an understanding of how the market works and your own financial goals. And if you don’t feel comfortable making those decisions on your own, an experienced financial advisor can help guide you so that your savings isn’t derailed by either the bulls or the bears.


The information contained in this article is of a general nature only and should not be considered as personal investment or financial advice. For advice about your specific situation, please consult with your advisor.