Bull and bear markets are common terms in financial conversations. You may have recently seen an article or heard a similar conversation and wondered, what is up with bulls and bears? Well, let's break it down so you can be aware of some common financial jargon used to explain the current status of the stock market.
Bear vs. Bear Markets
Bear markets are periods of time with a significant decrease in the stock market indexes (typically 20+%). The bear market is typically a shorter period of time relative to a bull market, and commonly coincides with a downturn in the economy, although economic performance is separate from stock market performance. The most recent bear market was in 2022 and lasted 282 days.
Bull markets are periods of significant growth in the stock market indexes over a period of time. Thankfully, bull markets tend to last longer than bear markets, averaging around 3.5 years each period. Bull markets tend to spur optimism amongst investors and stimulate a robust economy.
Strong and Steady Wins the Race
It can be tempting to emotionally respond based on a particular market. However, it is important to consider the power of diversification and focus on "time in the market" vs. trying to "time the market."
Where We Are Right Now
Currently, we are in a bull market. With new advances in AI and technology, there is a lot to be excited about in the markets. However, in time, we will very likely have our next bear market.
Why We Should Not Fear the Future
How we manage our finances is very important. In fact, Jesus teaches in Luke 16 that how we steward worldly wealth is an indication of whether we will be able to trusted with true riches in eternity.
When it comes to financial planning, we should indeed plan. But we should write our plans in pencil. As Corrie ten Boom once wrote, "never be afraid to trust an unknown future to a known God". Whether we remain in a bull market or see a turn towards a bear market, God is still in control. He is not surprised by bull markets or bear markets. We can trust Him and focus on what he has asked us to focus on - how we steward what He has entrusted to us.
The content in this material is for general information only and are not intended to provide specific advice or recommendations for any individual.
Source: Fidelity