“Another cause can be major changes in monetary policy such as the bear market of 2022 which was prompted by central banks starting to raise interest rates to tackle inflation after a long period of ultra-low borrowing costs,” he adds.
This means it can be difficult to predict when the end is nigh.
“In respect of shares, the most important thing to keep an eye on are valuations, the relationship between share prices and the actual earnings being generated,” suggests Mr Hollands.
“Where price growth is much higher than actual earnings growth and at levels that are significantly higher than longer-term trend, then this provides a red flag.”
FAQs
How long do bull markets last?
Bull markets can run for years, even a decade or more.
According to Evelyn Partners, there have been eight bull runs in the S&P 500 index since the 1970s – the shortest was 2.6 years, the longest nearly 13. Bull markets will also typically last longer than bear markets.
Should you buy during a bull market?
The evidence suggests the most successful investors over time are likely to be those that don’t attempt to time the market and drip feed money into the stock market throughout the full market cycles of peaks and troughs.
What sectors do best in a bull market?
Which sectors will perform best will depend on the circumstances of each particular run.
Mr Hollands says: “Previous bull markets have been led by many different sectors, including technology stocks, telecom companies, energy shares, commodities and in the early 17th century, even tulip bulbs.
“Bull markets can be led by big, new, cutting-edge ideas, but they can also be led by very traditional sectors that are sensitive to an upswing in demand as economic growth picks up.”
