← Stocks · lesson 11 of 12
By the end of this one you'll know what bull and bear markets are, why prices really rise and fall, and a trick so you never mix the animals up again.
A bull market is a long stretch where most stock prices climb, a stock being a small piece of a company, and a bear market is a long stretch where most of them fall, with a common rule of thumb that a 20% drop from the top gets called a bear. Here's the memory trick: a bull swings its horns up, a bear swipes its paw down. Prices move for the same reason hay prices move on my road. In a drought year everybody needs hay and few have it, so buyers outnumber sellers and the price climbs, that's the bull feeling, hope and hunger. In a good rain year every barn is stuffed, sellers outnumber buyers, and prices sag, that's the bear feeling, worry and waiting. And just like weather, nobody rings a bell announcing which season you're in, folks only agree on it looking backward, and nobody can say how long either season lasts.
Same lesson, told by a hundred dollar bill. Tap to walk it one step at a time.
In this example $100 of shares sits through a stretch where prices overall fall 20%, so the account shows about $80 on paper, and on paper means nothing is truly lost or gained until the shares are actually sold.
Later, prices climb 25% from that low point, and the $80 grows back to about $100.
Notice the sneaky math: after a 20% drop it takes a 25% climb just to get back to even.
You're third in the school pickup line when your phone buzzes with a news alert, stocks enter bear market, down 20 percent from the high. Your little practice account, the 250 dollars you built up slowly, now shows about 200. Your stomach drops before the school doors even open.
Pick your move. Then peek at the other roads if you're curious.
Bull and bear are just names for the market's seasons, and the seasons only get named for certain looking backward.