What Is a Secular Market?

A secular market is a market that is driven by forces that could be in place for many years, causing the price of a particular investment or asset class to rise or fall over a long period of time. In a secular bull market, positive conditions such as low-interest rates and strong corporate earnings push stock prices higher. In a secular bear market, where flagging corporate earnings or stagnation in the economy leads to weak investors sentiment, stocks experience selling pressure over an extended period of time. A cyclical market, in contrast, is shorter in duration in its peak-trough-peak movements.

Key Takeaways

  • With a secular market, big, overriding trends determine the direction of an investment or overall asset class, such as a strong economy and surging bull market.
  • By contrast, a cyclical market is less responsive to long-term forces and tends to have shorter rallies and shorter declines.

Understanding Secular Market

Secular markets are typically driven by large-scale national and international trends, which could occur in tandem. No greater an example than the global bull market in stocks and other risky assets that began in 2009 primarily in response to synchronized actions by central banks in the U.S. and around the world to flood economies with "easy money." At the beginning of 2018, the debate over the survival of the secular bull market intensified amid indications that central banks would begin in earnest to reverse their easy-money policies.

A secular bull market can have corrections (defined as a drop of 10% or more from a market high) or bear market periods within it, but they will not reverse the trend of upward asset values. (The same is true for a secular bear market.) Indeed, from 2009 to early 2018 (at the time of this writing) there have been a number of corrections, but no event or set of economic or political conditions serious enough to derail the bull market.

Secular Market Example

Though most often applied to the stock or bond market, a secular market can also be used to describe long-term demand for particular goods. The information technology market, for example, is experiencing secular growth that seems open-ended. E-commerce, cloud services, artificial intelligence — these are some of the underpinnings of long-run growth for the technology sector.