Defining a "Bull Market"

Defining a "Bull Market"

You may be hearing the term “bull market” recently - what does that mean and why is it so important? Let’s break it down.

A bull market represents the collective and sustained rise in prices or expected rise in prices. This can be for any type of financial market - stocks, bonds, commodities, etc. We are experiencing a bull market in equities (stocks) right now. For stocks, it represents growth, optimism, and investor confidence within that market. And it also signals a strengthening and strong economy. Technically, it’s a 20% rise in stocks prices after experiencing a 20% decline. 

It’s relevant now because this year marks the 9th year we’ve been in a bull market with equities. The S&P has quadrupled in value since the bottom in 2009.

A few key contributions to note for this bull market: 

  • Overall, the strength of the economy is the primarily driver - second quarter GDP (stands for “Gross Domestic Product” and is an economic indicator of the health of country) grew at 4.2%, which is the fastest pace in almost four years.

  • Rising corporate earnings - as second quarter earnings season is wrapping up, there has been a 25% increase in profits. This is mainly due to increased consumer & business spending due to tax cuts.

  • Apple recently became the first company to reach $1 trillion in market value and represents 4% of the S&P’s value. Apple’s stock is trading at 18 times the price it was trading at since March 2009, mainly driven by iPhone growth.

  • You may have heard of the term “F.A.N.G.” - this stands for these four companies: FaceBook, Amazon, Netflix, & Google. — combined, these four companies have contributed to $2 trillion in market cap since the beginning of the bull run.

Since 2016, stocks have continued to climb higher despite the Fed increasing interest rates (which usually has a negative impact on stocks), increasing geopolitical risks (particularly with N. Korea), and the uncertainty with the beginning of the Trump presidency. 

Consistency With Tracking Money

Consistency With Tracking Money

What do these financial markets mean?

What do these financial markets mean?

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