A “bull” market is described as a market that is rising or expected to rise, and a “bear” market defines prices that fall 20 percent or more from their recent highs.

The origin of the bull and bear market is based on the method of attack of each animal. When a bull attacks, it lowers its head, and uses it horns to thrust its opponent upward into the air. When a bear attacks, it swipes its claws down on its opponent with full force. Thus, a climbing market is termed a bull market and a plummeting market is a bear market.

We are currently in a bull market, which has just entered its 129th month of economic expansion — the longest U.S. recovery on record. Technology and entrepreneurship have led this economy forward and have boosted corporate profits. Tax reform and deregulation have also helped boost economic growth. Market analysts largely agree that most leading economic indicators today aren’t signaling a near-term recession. Looking back at what transpired in 2019 to continue the economic growth, some of the things that have occurred include the Federal Reserve adopting a looser stance by expanding its balance sheet, the labor force growing by 1.5 million participants, the jobless rate falling to a 50-year low at 3.5 percent and strong consumer spending.

Market crashes, defined as a bear market that lasts longer than a year, closely coincide with a recession. That’s why leading economic indicators of a financial, inflationary, consumption and business activity nature are so closely followed by market analysts.

What could cause problems for the economy? Historically, when the Federal Reserve policy has gotten too tight, it led the economy into a recession. Also, overvalued stock markets can be a negative signal for the economy. Increased government spending can make the economy less efficient and less able to grow. In addition, election cycles can create uncertainty because businesses may be reluctant to invest in new capital expenditures or more workers until they know what political environment they will be operating in.

Markets fluctuate from a bull market to a bear market, and back to a bull market. Even the most informed investor can’t predict the exact turning point between them. If you’re looking for good advice on how to plan your investment activity, remember this quote from legendary investor Sir John Templeton: “Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.”

Wendy Bennett is a senior financial adviser at Bennett Associates Wealth Management, 101 E. Diamond St., Suite 100, Butler. For more information, call 724-602-0075 or email Wendy.Bennett@BennettAWM.com.