What is a Secular Market?

by Investing School on March 11, 2011

The term “Secular Market” refers to a market that is motivated by market elements that may be in effect over the course of an extended period, even a number of years, which cause the price of a particular type of investment type to increase or decrease over that period of time. When there is a secular bull market, for example, there may be strong positive investor sentiments that push prices higher. This is because there are more buyers than sellers, on aggregate. However, when there is a secular bear market, more negative investor sentiments will tend to create increased pressure to sell during a longer period of time.

These secular markets are usually motivated by significant events on a national or even worldwide scale, some of which can combine for even greater effect. Examples of secular market motivators can include population changes, wars and conflicts, demographic shifts and governmental or political upheavals.

In most cases, even if there is a secular bull market, there will likely be some bear market periods during the time frame. However, these downward trending periods are not strong or lengthy enough to reverse the more powerful trend of increasing asset values.

One example of this would be the secular bull market in the United States, which lasted from roughly 1980 to 2000. Although there was a stock market crash in 1987, these losses were soon recovered. After the crash, the market rose further over the following thirteen years.

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