Understanding Bull Markets

A bull market is defined less by technicalities and more by its behavior. If it trades like a bull market, it is a bull market. The signs are clear in the patterns of buying, optimism and upward momentum, regardless of underlying conditions.

In a bull market, conventional wisdom often loses its grip. Bad news is ignored, dismissed or rationalized, while any positive development becomes fuel for further rallies. Confidence grows, sometimes to the point of excess, and market sentiment can appear detached from reality.

Yet no market is entirely immune to fundamental laws. Bull markets can obscure mathematical truths, but they cannot repeal them. Valuations, probabilities and risk constraints still exist beneath the surface. Over time, these factors reassert themselves, often reminding participants that exuberance alone cannot create unlimited gains.

Understanding this dual nature is crucial for navigating bull markets. Momentum that seems unstoppable, paired with immutable financial principles. Awareness, preparation and discipline allow participants to benefit from upward trends without being blindsided when reality eventually reasserts itself.