When the stock market starts talking about animals – more specifically “bulls” and “bears” – retail shareholders should take note. Simply put, a bull market is a sustained period when investment prices are rising in a financial market while a bear market is a sustained period when investment prices are falling.

It is important to note that neither is inherently good or bad for retail investors. But depending on whether we are in a bull or bear market could mean individual shareholders might want to change their investment strategies.

Because bear markets usually precede or run parallel to a recession, retail shareholders often seek out defensive investing strategies and look for assets that deliver a steadier return. The opposite is true as well: Many investors turn to a higher allocation of stocks in a bull market as they seek higher returns.

Neither market is better than the other from an investing standpoint. Retail shareholders can make money investing in both bull and bear markets. Much more important than whether the market is in a bull or bear market is timing – buying low and selling high.

Many retail shareholders turn to stocks in a bull market where the potential for higher returns is present, buying stocks early in the bull market and selling them prior to the peak and the start of a bear market. During bear markets, some investors turn to a defensive strategy that might include investing in more dividend-paying stocks.

Bull and bear markets are cyclical; they don’t last forever. Markets in the U.S. have going through many bull markets, which started with the boom after World War II. The longest bull market, which lasted from 2009 to 2019 began after the collapse of the U.S. housing market. Bull markets are sustained periods where investor and public confidence is high and investors expect the value of stocks to rise.

When the economy begins to sour, bull markets hit what’s known as a “speculative bubble” – a high point in the value of the stock market when asset values are fueled more by optimism than actual value. At some point, the bubble pops, stock prices drop and the bull market comes to an end.

A bear market begins when a stock or broad index (like the S&P 500) falls at least 20% from its most recent high. The opposite is a bull market, when prices rise at least 20% from bear market lows. Between 1947 and 2022, there have been 14 bear markets, ranging in length from one month to 1.7 years, and in severity from a 51.9% drop in the S&P 500 to a decline of 20.6%, according to an analysis by First Trust Advisors.

Bear markets are can be caused by different events. The Great Depression caused one of the most famous bear market and the current bear market was caused by the Fed tightening interest rates to control inflation and the first European land war since World War 2.

The S&P 500 began to lose steam last January, but it didn’t officially enter a bear market until June 13, 2022. How long will it last? It is difficult to tell, but the longest bear market in history occurred in the wake of the dot-com bubble burst in the early 2000s, lasting 929 days. The shortest bear in spring 2020 lasted just 33 days. The average length of a bear market is 388 days. Excluding the longest and shortest bear markets, the average length is around 330 days, though there are no guarantees of when a market will rebound or whether it will remain in a bear market.

So as a retail shareholder, it is important to remember that timing is more important than whether stocks are facing a bear or bull market. Bear and bull markets come and go, but figuring out when they might begin or end is more important for individual investors than which one we happen to be in.