BASICS
Cryptocurrencies Review – BTC vs. ETHJul 21
Bull vs. Bear Market
Taking into account this 20% (twenty percent) rule, we should make a quick analysis of the stock or market’s historical price changes to give some examples of bull or bear markets of the past. As the first step, we have to determine the lowest level of the stock or the market (instrument, commodity, precious metal, etc.) and then find the change in terms of percentage. If this change in percentage is above 20%, that means we have faced a bull market. On the other hand, the highest level of the stock or the market (instrument, commodity, precious metal, etc.) will be our first step to take and then, we will find how much the decline is. If this decline in percentage is above 20%, that means we, or at least the investors of that time, have experienced tough times.
Let’s take a look at S&P 500, capturing the movements of 500 US stocks. It would be a good example as it has 500 stocks and this will be helpful to see how and in which direction the broader market is moving. Between 2007 and 2009, S&P 500 fell about 50%. Clearly, we call it a bear market according to our rule. Afterward, we see it rising for 11 years from 2009 to February 2020, this movement was above almost 300%. So again, according to our rule, we call it a bull market. In fact, it was the longest-running bull market in financial history.
