What Is a Bull Market?

A bull market refers to a market trend in which stock values are generally rising and investors are trading stocks and other securities with confidence. In contrast, a bear market occurs when stocks decline 15 to 20 percent or more over a period of at least a few months. Stock market performance is measured on several indices, such as the Dow Jones Industrial Average and S&P 500. The stock market rises and falls over time, but economists aren't sure what causes changes in market trends.

Investing in a Bull Market

Investors typically feel confident purchasing stocks in a bull market because they believe stocks will continue to rise in value. Investor confidence helps the positive market trend continue because it adds more money into the market. If investor perception changes, however, investors may stop buying stocks, leading to a drop in stock value and a potential bear market. Although it may seem tempting to invest in a bull market, buying stocks at low prices in a bear market and then selling them in a bull market, when they have increased in value, may lead to higher returns.

Factors that Affect Markets

No one knows exactly what causes a bull or bear market, although many people have tried to make predictions for the market's future trends. Some factors that influence bull markets include the actions of investors, the strengths of individual businesses and industries, natural disasters, changes in currency value, economic indicators and government decisions such as interest rates and tax rates. Bull markets can turn to bear markets quickly, and vice versa.

Historical Bull Markets

Famous bull markets in U.S. history include the time periods from 1932 to 1937, 1953 to 1959, from 1981 to 1989 and from 1990 to 2000. The bull market between 1990 and 2000 had a larger, longer increase than the other bull markets.