A bull market is when stocks are rising and the overall mood is optimistic — think of a bull charging forward with its horns up. A bear market is the opposite: stocks are falling, fear is spreading, and people are pulling money out. The official Wall Street definition of a bear market is a decline of 20% or more from a recent high in a major index like the S&P 500. A correction is a drop of 10-20%. Anything less than 10% is just normal market noise. Knowing the difference matters because your strategy should change depending on which environment you're in.

Bull markets tend to last longer than bear markets. Since 1945, the average bull market has lasted about 5 years with an average gain of around 180%. The average bear market lasts about 13 months with an average decline of about 33%. The math is in your favor as a long-term investor — markets spend far more time going up than going down. The longest bull market in history ran from March 2009 to February 2020 — nearly 11 years — during which the S&P 500 gained over 400%. That run ended abruptly when COVID-19 triggered one of the fastest bear markets ever, with the S&P 500 dropping 34% in just 23 trading days.

The key to surviving both environments is understanding what drives each one. Bull markets are typically fueled by strong economic growth, rising corporate earnings, low interest rates, and investor confidence. Bear markets are triggered by the opposite: recessions, falling profits, rising interest rates, or unexpected shocks (like a pandemic or financial crisis). You can't predict exactly when a bull will turn into a bear, but you can watch the signals — things like the yield curve inverting, unemployment ticking up, or the Fed aggressively raising rates. These don't give you exact timing, but they tell you to pay attention.

Here's what smart investors do in each phase. In a bull market: stay invested, let your winners run, and don't get greedy with leverage. In a bear market: don't panic sell, consider buying quality stocks at discounted prices, and keep some cash on the sidelines for opportunities. The worst thing you can do is sell everything during a crash and then miss the recovery. Missing just the 10 best trading days over a 20-year period can cut your total returns in half. Time in the market beats timing the market — that's not just a saying, it's backed by decades of data.