A bull market is a period in which the prices in a market rise overall. Any asset class, including stocks, bonds, or commodities, can experience a bull market. Historically, bull markets tend to last longer than bear markets.
Bull markets in stocks often coincide with periods of robust economic growth. Increased earnings often lead to higher stock prices, and a general optimism can attract more people to the stock market, increasing share prices further. At the extreme, bull markets can create bubbles in which prices rise far past the value of the underlying asset.
While bull markets are appealing, shares and companies generally get more expensive during bullish times. Unless the rise in price is driven by rapidly growing profits or the realistic prospect of some disruptive innovation that promises large profits in the future, companies are less likely to be undervalued, and thus less likely to provide high returns over the long term.
David Gardner Explains
Related Fool Articles
Related Community Blogs
Recent Mentions on Fool.com
- Acer Kicks Intel Out of Its Smartphones for 2014
- This 1 Figure Could Keep the Stock Market From Reaching New Highs
- Stronger Nickel Prices to Benefit Vale, BHP Billiton
- Why You Simply Can't Ignore Dividend Stocks in Today's Market
- 4 Reasons You Should Watch This Under-the-Radar Stock on Your Watchlist
- Earnings Season: How the Dow's Financials Fared This Week