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Is the US in a bull or bear market right now? Why can’t the experts agree?
Depending on which financial analyst or media outlet you listen to, right now the US stock market is either a bull, a bear, or a bull within a bear. To avoid risky bets on stocks, ignore current, frenzied bull and bear forecasts and look to experts who take a retrospective approach to assessing the market’s health.
Continue reading for a breakdown of each side’s opinion on the matter, and how to create your investment strategy.
What Type of Market Are We In?
On June 8, the S&P 500 closed up more than 20% from its October lows, launching a new bull market that, according to some, officially ended the S&P’s longest bear run in 75 years. But some experts say the bull market may not be here to stay—and they warn that investors who ignore red flags of an unhealthy market could make a bad bet on stocks and lose a ton of money.
What Are Bull and Bear Markets?
The terms “bull” and “bear” market refer to how stock markets are faring, generally.
- In a bull market, investors are optimistic and confident, and they buy stocks because they think they’ll make money, which drives prices up. There’s positive economic growth and low unemployment.
- In a bear market, investors are fearful and cautious, and they sell stocks because they think they’ll lose money, which pushes prices down. There’s negative economic growth and high unemployment.
It’s important to understand whether we’re in a bull or bear market because as the stock market (currently in bull territory) continues to rise, so do potential negative consequences for investors who fail to accurately predict an economic downturn and make the wrong bet on stocks.
View 1: We’re in a Bull Market
Some financial analysts argue that the following factors indicate that we’re in a new bull market:
- In early June, the S&P 500 rose 20% from its last lowest point in October—the metric that many experts argue marks the start of a new bull market.
- A resilient economy. The economy has survived skyrocketing interest rates and inflation, bank collapses, and ongoing recession concerns.
- Stocks broke free of the trading range they’d been confined to for months, aided by investor excitement about Congress’s debt ceiling deal and the explosive rise of Artificial Intelligence technology.
View 2: We’re in a Bear Market
Other financial analysts contend that it’s too soon to definitively say we’re in a lasting bull market. A number of signs suggest that the market’s current strength may not last, including that, historically, bull markets have arisen within longer bear markets.
- The rally is misleading. Though the market appears bullish, its recent upward spike was fueled by excitement over just seven S&P 500 companies—Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta. Meanwhile, the performance of the remaining 493 S&P companies has been relatively flat.
- Inflation remains high. With inflation at more than twice the Fed’s target rate of 2%, the Board will likely raise rates and allow them to stay high for longer, which will constrict the economy.
- Economic uncertainty looms. New bull markets don’t typically start during periods of economic instability.
Looking Ahead
Some experts warn investors not to get caught up in current bull and bear forecasts, which offer more insight into where the market has been than where it’s heading. They argue that, given the broad range of factors at play, it’s impossible to accurately forecast where the market will end up as the situation is unfolding. As a result, the labels are of little use in determining the best way to act, now, or prepare for the future.
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