What characterizes a bull market?

A bull market is characterized by rising asset prices and investor confidence. This phenomenon typically arises when there is a general optimism about future economic performance, leading to increased purchasing activity in the financial markets. Investors are generally more willing to buy equities and other assets as they anticipate continued price increases, which reinforces the upward trend.

During a bull market, major market indices usually experience prolonged periods of growth, often defined as an increase of 20% or more from recent lows. The positive sentiment among investors can be influenced by various factors, including economic growth, favorable corporate earnings reports, and low unemployment rates. This collective confidence tends to foster an environment whereby investors are more inclined to commit capital, expecting that the upward trajectory will continue.

In contrast, situations characterized by declining prices, static values, or high volatility typically indicate bearish conditions or uncertain market environments, which are not aligned with the essence of a bull market.