Bull vs Bear Market: What's the Difference?

Start hereIn 1987 the Dow fell 22.6% in a single day, and no recession followed. From October 2007 to March 2009 the S&P 500 fell 57%, and the Great Recession ran over roughly the same stretch. So how do bear markets and recessions relate?

A bull market is a stretch of time when prices in a market keep rising and the mood is hopeful. A bear market is the opposite: prices keep falling and the mood is gloomy. A rise or fall of 20% or more in a broad market index is the usual yardstick.

Past patterns are not predictions. In the words of the SEC’s investor site, “past performance cannot predict how an investment strategy will perform in the future”. This page explains two words. It does not tell you what to do with your money.

01At a glance

	Bull market	Bear market
In one line	Stock prices rising, mood optimistic	Stock prices falling, mood pessimistic
The usual yardstick	A rise of 20% or more in a broad market index	A fall of 20% or more in a broad market index
Is the 20% official?	Our reading: no, it is a convention	Our reading: no, it is a convention
Where the word comes from	It seems to have been picked as a match for the bear	Probably an old proverb about selling the bearskin before catching the bear
First known use of the phrase	1858	1858
Same as an economic boom or slump?	Our reading: no, the economy is measured separately	Our reading: no, a recession is dated by other measures

Each cell is explained, with its source, in the sections below.

021. What the two words mean

The SEC’s website for individual investors, Investor.gov, describes a bull market as “a time when stock prices are rising and market sentiment is optimistic”. Its bear market is “a time when stock prices are declining and market sentiment is pessimistic”.

Both entries then add a number. Generally, a bull market is a rise of 20% or more in a broad market index over at least a two-month period. A bear market is generally a fall of 20% or more over at least a two-month period.

FINRA, a self-regulatory body for US brokerage firms, says it is not part of the government. It words the idea a little differently.

In its list of market terms, a bear market is when “a stock or bond index, or a commodity’s price, falls and keeps falling”. A decline of 20% or more in a broad market index “is said to meet the threshold”. Its wording has no two-month window.

Merriam-Webster’s dictionary gives no number at all. In a bear market prices are persistently declining in value; in a bull market they are persistently rising.

Our reading: three careful sources give three slightly different yardsticks. That is what a convention looks like.

032. Where “bull” and “bear” come from

The bear came first, says Merriam-Webster. Its dictionary says this sense of bear probably comes from the proverb about selling the bearskin before catching the bear.

• By the 1700s, people spoke of selling the bearskin and of a bearskin jobber.
• The word was soon shortened to bear, for both the stock being sold and the speculator selling it.
• Such a bear sold borrowed stock for delivery at a future date, expecting the price to fall.

In 1709 the writer Richard Steele feared the word was “hardly to be understood among the polite people”. The collapse of the South Sea Bubble in 1720 brought it into wide use.

The bull is harder to pin down. Merriam-Webster says the animal seems to have been chosen as a fitting match for the bear. The poet Alexander Pope paired the two in a 1720 verse about the South Sea.

The full phrases came much later: Merriam-Webster gives 1858 as the first known use of both bull market and bear market. Our reading: the bear’s story is fairly well traced, with a “probably” attached. The bull’s is less certain.

043. Who decides when one starts?

Our reading: no regulator or official body that we could find declares a bull or bear market. Investor.gov describes the 20% figure as what “generally” applies to both, and FINRA says the same for a bear market.

Recessions are different. In the US, a committee at the National Bureau of Economic Research (NBER) keeps the chronology of business cycles. The NBER is a private, nonprofit research organisation. It notes that the US government publishes no alternative chronology.

Both kinds of label tend to come late. Our reading: a two-month window means a bull or bear market can only be named once some time has passed. The NBER, too, tends to wait a number of months before it names a peak.

054. A bear market is not a recession

The NBER describes a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months”. In recent decades its committee has put the most weight on two measures: real personal income (adjusted for inflation, less government transfers) and payroll jobs. Share prices are not one of the two.

A big fall in share prices and a recession can happen apart:

• In 1987 the Dow Jones Industrial Average fell 22.6% in a single trading session. The Federal Reserve’s history site says the losses were not followed by a recession or a banking crisis.
• In 2022 the S&P 500 fell about 25%, from 4,796.56 on 3 January to 3,577.03 on 12 October (our calculation from FRED daily closes). As of October 2026, the NBER’s most recent turning points are still a peak in February 2020 and a trough in April 2020. Our reading: by Investor.gov’s yardstick that was a bear market, yet no recession was dated around it.

They can also come together. The Great Recession ran from December 2007 to June 2009. Over roughly the same stretch, the S&P 500 fell 57% from its October 2007 peak to its trough in March 2009.

065. Common mix-ups

• Does a big market fall mean a recession? Not always, as 1987 and 2022 show. The NBER dates recessions from the wider economy.
• Is the 20% line an official rule? Not one that we could find. The sources word it slightly differently (see section 3).
• Are two quarters in a row of falling GDP a recession? The NBER says most recessions it has dated include two or more quarters in a row of falling real GDP, but not all. The 2001 recession did not include two quarters in a row.
• Do the names come from bulls tossing upward and bears swiping down? That picture is a handy way to remember which is which. It is not the history Merriam-Webster gives, which starts with the bearskin proverb.
• Is every sharp drop a bear market? Not by these yardsticks. FINRA calls a move of at least 10% a correction. It says the word is usually used for a drop in prices.

076. How to read these words when you meet them

Five questions to ask, drawn from the sources above (our reading):

1. Which index is meant, and from which peak or low is the change measured?
2. Is a time window included, such as Investor.gov’s two months?
3. Was the label given at the time, or looking back?
4. Is the claim about the market or the economy? The NBER’s dates are where US recessions are recorded.
5. Does the chart or table show both rising and falling stretches? The SEC’s investor bulletin suggests questioning any performance record that does not cover reasonable time periods, including both up and down markets.

Our page on numbers that mislead covers survivorship bias, small samples and other traps worth knowing before you read any chart.

08Where to go next

• Investor.gov glossary: plain definitions of market terms from the SEC’s site for individual investors.
• FINRA, “Key Terms for Tough Times”: a short list of words used in stressed markets, from bear market to circuit breaker.
• NBER Business Cycle Dating: where US recessions are dated, with a table of peaks and troughs going back to 1854.
• Federal Reserve History: plain essays on past crashes and recessions, including 1987 and 2007–09.
• Merriam-Webster, “The History of ‘Bull’ and ‘Bear’ Markets”: the bearskin proverb and the quotations from the 1700s.
• SEC investor bulletin on performance claims: what to ask when someone shows you past returns.

09Quick answers

10Use this

11Quick quiz

How we checked this · Last checked October 2026

• We read the bull and bear market entries on Investor.gov, the SEC's site for individual investors, and FINRA's list of market terms.
• Merriam-Webster blocks scripts, so we read its dictionary entries and its article on the two words in a browser.
• For recessions we read the NBER's dating pages, its FAQ and its table of peaks and troughs.
• The 2022 figures are our own calculation from FRED's daily S&P 500 closes. We found no source that says outright that no official body declares bull or bear markets, so that line is marked as our reading.
• This page explains words. It does not recommend any investment or predict any market.

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12Sources