Types of Bull Market
There are four primary types of bull markets, categorized based on their underlying drivers and characteristics.
Main Categories
- Secular Bull Market — a long-term bull market driven by strong economic fundamentals, characterized by a prolonged period of low inflation, low interest rates, and high economic growth, as seen in the US stock market from 1982 to 2000, which was fueled by the rise of the technology sector and globalization.
- Cyclical Bull Market — a short-term bull market driven by the business cycle, characterized by a brief period of economic expansion, as exemplified by the 2003-2007 bull run in the US stock market, which was driven by a recovery in corporate earnings and a decline in interest rates.
- Structural Bull Market — a bull market driven by significant changes in the economic or market structure, characterized by a shift in the underlying dynamics of the market, as illustrated by the 1980s bull market in Japan, which was fueled by the country's rapid industrialization and the emergence of its technology sector.
- Speculative Bull Market — a bull market driven by speculation and investor sentiment, characterized by a rapid increase in asset prices driven by expectations of future price gains, as seen in the 1995-2000 dot-com bubble, which was fueled by excessive speculation in technology stocks.
Comparison Table
| Category | Driver | Duration | Risk |
|---|---|---|---|
| Secular Bull Market | Strong economic fundamentals | 10-20 years | Low |
| Cyclical Bull Market | Business cycle | 2-5 years | Medium |
| Structural Bull Market | Changes in economic or market structure | 5-15 years | Medium |
| Speculative Bull Market | Speculation and investor sentiment | 1-3 years | High |
How They Relate
The categories are not mutually exclusive, and a bull market can exhibit characteristics of multiple categories. For example, a secular bull market can be punctuated by cyclical bull markets, as seen in the US stock market from 1982 to 2000, which experienced several cyclical bull markets within the broader secular bull market. Similarly, a structural bull market can be driven by speculative forces, as illustrated by the 1980s bull market in Japan, which was fueled by both the country's rapid industrialization and excessive speculation. The US stock market from 2009 to 2020 is another example, which can be characterized as both a secular bull market, driven by strong economic fundamentals, and a speculative bull market, driven by excessive speculation in certain sectors.