Bull vs Bear Markets: What’s the Difference and What Should UK Expats Do?

For anyone investing for the future, understanding bull vs bear markets is an important part of making sense of financial market movements.

But what do bull and bear markets actually mean? How different are they? And, perhaps most importantly, what should UK expats do when markets move from one environment to another?

In this article, I will explain bull vs bear markets, the key differences between them, what they can mean for UK expats and some of the principles that can help investors remain focused when markets become uncertain.

Key Takeaways

• Bull markets generally involve rising investment prices and positive investor sentiment, while bear markets involve sustained declines and greater uncertainty.

• Bull and bear markets are normal parts of investing, so UK expats should avoid making decisions based solely on short-term market movements.

• Time horizon, risk tolerance and capacity for loss are important when deciding how to respond to changing market conditions.

• Diversification and appropriate liquidity can help investors manage periods of market volatility without being forced into rushed decisions.

• Different expats may require different strategies depending on their age, financial position, retirement plans and intended country of residence.

• Professional financial planning can help UK expats build a strategy that remains aligned with their goals through both bull and bear markets.

What is a Bull Market?

A bull market generally describes a sustained period in which investment prices are rising and investor sentiment is positive.

The term most commonly refers to shares and stock-market indices, although people can also talk about bull markets in other asset classes.

There is no single universal definition that applies to every market. However, one widely used convention describes a bull market as a rise of at least 20% from a recent market low.

A bull market is usually associated with increasing optimism. Investors may expect company profits to improve, economic conditions to strengthen or the outlook for businesses to become more favourable.

However, a rising market does not necessarily mean that every investment will perform well.

A global equity index, for example, can rise while particular countries, sectors or individual companies fall. Likewise, an investor's portfolio may behave differently from the headline index they see on the evening news.

This is particularly relevant to expats because their portfolio may contain investments across several regions and currencies.

Typical characteristics of a bull market

A bull market can involve:

• Rising share prices

• Increasing investor confidence

• Stronger expectations for company earnings

• Greater willingness to take investment risk

• Positive economic expectations

• Increased demand for risk assets

• Rising valuations in some parts of the market

Bull markets can be positive for long-term investors because rising asset values can increase the value of investment portfolios.

However, they can also create risks.

When markets have performed strongly for an extended period, investors can become overconfident. They may assume that recent returns will continue indefinitely or take more risk than their financial plan can reasonably support.

For this reason, a bull market should not automatically be interpreted as a signal to invest more aggressively.

What is a Bear Market?

A bear market is generally the opposite environment.

It describes a prolonged period of falling investment prices and deteriorating investor sentiment. A commonly used definition is a fall of 20% or more in a broad market index from a recent high.

Bear markets can arise for many different reasons.

Economic growth may weaken. Inflation may remain elevated. Interest rates may rise. Corporate profits may fall. Geopolitical events can affect confidence. Financial stress can spread through markets. Sometimes investors simply become concerned that asset prices have risen too far relative to underlying economic conditions.

Importantly, a bear market does not necessarily mean that the entire economy is collapsing.

Markets are forward-looking. Investors constantly attempt to assess what economic and corporate conditions could look like in the future. Share prices can therefore fall because investors expect weaker conditions, even before those conditions become visible in economic data.

Typical characteristics of a bear market

A bear market can involve:

• Falling share prices

• Greater market volatility

• Increasing investor uncertainty

• Reduced confidence

• Concerns about economic growth

• Pressure on company profits

• Increased demand for defensive assets

• Greater uncertainty around investment returns

For an investor, seeing a portfolio fall in value can be uncomfortable.

For an expat, the experience can be even more complicated because the portfolio's value may also change when converted into the currency used to pay everyday expenses.

That is one reason why UK expats should consider currency risk alongside investment risk.

Bull vs Bear Markets: The Key Differences

The simplest way to distinguish the two is this:

Bull market = broadly rising prices and positive sentiment.

Bear market = broadly falling prices and negative sentiment.

But the difference goes further than simply whether markets are going up or down.

The important point is that neither environment automatically tells you what you should do with your money.

An investor's appropriate response depends on why they are investing in the first place.

Why Do Bull And Bear Markets Happen?

Bull and bear markets rarely have a single cause. Instead, they usually develop from a combination of economic conditions, company performance, investor expectations, interest rates, inflation and geopolitical events.

For UK expats, understanding these drivers can make market movements easier to put into perspective, particularly when investments, income and future spending involve different countries and currencies.

Economic Growth

Economic growth is one of the fundamental forces behind market performance because it affects how much businesses can sell and how much profit they may generate. When an economy is expanding, consumers typically spend more, businesses may invest more and companies can benefit from stronger demand. As a result, investors may become more optimistic about future earnings, supporting rising share prices and potentially contributing to a bull market.

Conversely, when economic growth slows or an economy enters a recession, investors may expect company revenues and profits to weaken. This can reduce confidence and put downward pressure on share prices, potentially contributing to a bear market.

For example, if an economy grows steadily and a company's annual profit increases from £10 million to £12 million, investors may be willing to pay more for its shares because they expect future earnings to remain strong. However, if economic conditions deteriorate and profits are expected to fall to £8 million, investors may reassess what the company is worth.

For expats, it is also important to remember that economic conditions vary between countries. A UK expat living in Singapore, for instance, may have investments linked to several economies, meaning strong growth in one region could partly offset weaker conditions in another.

Interest Rates

Interest rates can have a significant influence on both markets and investor behaviour because they affect the cost of borrowing and the potential attractiveness of different investments. When interest rates are low, borrowing can become cheaper, which may encourage consumers and businesses to spend and invest. At the same time, investors may look towards shares and other growth assets for potentially higher returns.

However, when central banks raise interest rates, borrowing becomes more expensive. This can reduce consumer spending and business investment, while also increasing the appeal of interest-bearing savings and bonds relative to some riskier investments. Consequently, higher rates can contribute to weaker economic expectations and falling asset prices.

For example, suppose a business has £100 million of debt and its average borrowing cost rises from 3% to 5%. Its annual interest expense could increase from approximately £3 million to £5 million — an additional £2 million before considering any other changes. If this reduces its expected profits, investors may reassess the value of the company.

For UK expats, interest rates can also matter through currency movements. Changes in UK or overseas interest rates can influence exchange rates, which may affect the sterling value of foreign investments and income.

Inflation

Inflation refers to the general increase in prices over time, reducing the purchasing power of money. When inflation remains relatively stable, businesses and consumers may find it easier to plan. However, unexpectedly high or persistent inflation can create uncertainty because companies face higher costs and households may have less money available for discretionary spending.

For example, imagine a business spends £1 million a year on raw materials. If those costs rise by 8%, the annual expense could increase to £1.08 million. Unless the business can raise its prices or improve efficiency, its profit margin may come under pressure.

Inflation can therefore affect markets in several ways. Higher costs can reduce corporate profits, while persistent inflation can encourage central banks to raise interest rates. These effects can reinforce each other and contribute to weaker market sentiment.

For expats, inflation should also be considered in terms of purchasing power. An investor living overseas may need to think about how rising prices in their country of residence could affect future spending, particularly if they plan to fund retirement or other long-term goals from investments held in pounds sterling.

Corporate Earnings

Ultimately, the value of many investments is closely connected to the financial performance and future prospects of the underlying businesses. When companies report strong revenue and profit growth, investors may become more confident about their future earnings, which can support higher share prices.

On the other hand, disappointing results or weaker forecasts can cause investors to reassess a company's prospects. If many companies experience declining profits at the same time, the wider market can come under pressure.

Consider a company earning £2 per share. If investors expect earnings to increase to £2.40 per share, they may place a higher value on the company's shares. However, if management later warns that earnings could fall to £1.60, investors may reduce the price they are willing to pay.

Importantly, markets respond to expectations as well as current results. A company can report higher profits but still see its share price fall if investors expected an even stronger result. Similarly, a company can report weaker profits but see its share price rise if the results are better than investors feared.

Investor Sentiment

Investor sentiment describes how optimistic or pessimistic investors feel about financial markets and the economic outlook. Although sentiment is influenced by economic data and company performance, emotions can also play an important role.

During a bull market, rising prices can create confidence. Investors may become increasingly willing to take risks, which can push prices higher. However, this optimism can sometimes become excessive, particularly when investors assume that recent performance will continue indefinitely.

During a bear market, the process can work in reverse. Falling prices can create fear, causing investors to sell investments to reduce their exposure to further losses. These sales can place additional downward pressure on prices and increase market volatility.

For example, an investor with a £100,000 portfolio who sees its value fall to £80,000 may understandably feel uncomfortable. If they sell because they fear further losses and the market subsequently recovers, they could miss part of that recovery.

For UK expats, emotional decisions can be particularly problematic when currency movements are involved. A falling investment and an unfavourable exchange-rate movement can make a portfolio appear even more volatile when measured in pounds sterling.

Geopolitical Events

Geopolitical events can influence markets because they can affect trade, energy supplies, government policy, economic growth and investor confidence. Wars, elections, trade disputes, sanctions and international tensions can all introduce uncertainty into financial markets.

For example, a disruption to energy supplies could increase energy prices. Higher energy costs could then raise production and transportation expenses for businesses, potentially affecting corporate profits and inflation. Investors may respond by reassessing companies, industries or entire economies exposed to those developments.

However, the market reaction to geopolitical events is not always straightforward. Investors consider both the immediate impact and what they believe the longer-term consequences will be. Therefore, a major event does not necessarily result in a prolonged bear market.

For internationally mobile UK expats, geopolitical developments can be particularly relevant because their investments, income and financial commitments may span several countries. A diversified portfolio can therefore help reduce reliance on the economic fortunes of any single market, although diversification cannot eliminate investment risk.

How These Factors Can Work Together

The factors above rarely operate independently. Instead, one development can trigger a chain reaction across the economy and financial markets.

For example:

Equally, the process can work in the opposite direction. Falling inflation can allow interest rates to stabilise or decline, supporting borrowing and economic activity. Improving corporate earnings can then strengthen investor confidence, potentially contributing to a recovery and eventually a new bull market.

This is why bull vs bear markets should not be viewed as simple switches between “good” and “bad” periods. Markets respond to a constantly changing combination of economic conditions, expectations and investor behaviour.

For UK expats, the most useful approach is therefore to understand what is driving the market, consider how those developments affect their own financial circumstances and avoid making major investment decisions based solely on short-term headlines.

What is the Difference Between a Market Correction and a Bear Market?

This is another distinction worth understanding.

A market correction generally describes a decline of around 10% from a recent high, although terminology can vary.

A bear market is commonly associated with a decline of at least 20%.

The distinction matters because markets can experience relatively frequent corrections without entering a prolonged bear market.

Investors therefore need to avoid treating every market fall as evidence that a major financial crisis is beginning.

Similarly, a 20% decline does not automatically tell you what will happen next.

Markets can recover. They can fall further. They can move sideways for a period of time before establishing a clearer direction.

This uncertainty is one reason I believe a financial plan should not depend on accurately predicting the next market movement.

What Should UK Expats Do During A Bull Market?

A bull market can be encouraging for investors because rising asset prices can increase the value of their portfolios. However, strong market performance can also create a false sense of security and encourage investors to take more risk than they originally intended. For UK expats, this is an important time to review the bigger picture, particularly when investments, income, pensions and future spending may involve different countries and currencies.

Rather than assuming that rising markets will continue indefinitely, expats can use a bull market as an opportunity to review their financial strategy and make sure it remains aligned with their long-term objectives.

1. Avoid Assuming That Recent Performance Will Continue

When markets have performed strongly for several years, it can be tempting to believe that the same trend will continue. However, past performance does not guarantee future returns, and markets can change direction unexpectedly.

For example, suppose an investment portfolio worth £100,000 grows by 10% in one year, increasing to £110,000. If it then grows by another 10%, it reaches £121,000. While this may appear encouraging, investors should not assume that another 10% gain will necessarily follow. Market returns can vary considerably from one year to the next.

Strong performance can also encourage investors to chase investments that have recently done well. For instance, an expat might see that a particular technology sector has generated substantial returns and decide to increase their exposure after the rise has already occurred. However, buying simply because an investment has performed well can increase the risk of entering at an unfavourable valuation or becoming overly concentrated in one area.

Instead, consider whether each investment still has a clear purpose within your overall financial plan. If an investment has grown significantly and now represents a much larger proportion of your portfolio than originally intended, it may be appropriate to review the balance.

For expats, this review should also consider currency exposure. A portfolio may appear to have performed particularly well when measured in pounds sterling, for example, but part of that result may have come from movements in the exchange rate rather than the underlying investments alone.

The key lesson is simple: a bull market can increase wealth, but it should not automatically increase the amount of risk you are willing to take.

2. Review Whether Your Risk Level Remains Appropriate

A rising market can make investors feel more comfortable with investment risk. When portfolios are increasing in value, temporary losses may seem less concerning. However, this confidence can change quickly when markets fall.

For example, imagine that an expat has a £200,000 investment portfolio and decides to hold a larger proportion in higher-risk assets after several years of strong market performance. If markets subsequently fall by 25%, the portfolio could lose £50,000 in value, falling to £150,000 before considering any other changes.

The important question is not simply whether an investor can tolerate a loss on paper. It is whether they could remain financially comfortable and stay committed to their strategy if that loss actually occurred.

This is particularly important for expats approaching retirement. Someone with 20 or 30 years before retirement may have more time to recover from market declines than someone who expects to start drawing £30,000 a year from their investments within the next few years.

It is therefore worth reviewing:

• How much of your portfolio is invested in higher-risk assets

• How much you could afford to lose without affecting your financial plans

• When you expect to need the money

• Whether your income is stable

• Whether your retirement date has changed

• Whether your investment strategy still matches your objectives

For UK expats, risk should also be considered alongside currency and country exposure. Holding investments across different markets may provide diversification, but it can also introduce additional currency movements that affect the sterling value of your portfolio.

A bull market is therefore a useful opportunity to ask whether your current level of risk is intentional — rather than simply the result of investments that have risen in value.

3. Consider Diversification

Diversification involves spreading investments across different assets, markets and sectors rather than relying heavily on one particular investment. The aim is to reduce the impact that poor performance in one area can have on the overall portfolio.

For example, imagine an investor has a £100,000 portfolio consisting entirely of shares in one company. If that company's share price falls by 30%, the portfolio could fall to approximately £70,000.

By contrast, suppose the same £100,000 is spread across a broader range of investments. A 30% fall in one holding may still hurt, but its effect on the total portfolio could be considerably smaller if the other investments perform differently.

Diversification does not guarantee that a portfolio will make money or prevent losses. Markets can fall broadly at the same time. However, spreading exposure can reduce dependence on the performance of a single company, sector, country or asset class.

For UK expats, diversification can involve several additional considerations:

This broader perspective is particularly important for expats because diversification should be considered across their overall wealth, rather than simply within one investment account.

For example, an expat may already have significant exposure to UK assets through a property, pension and savings account. Adding further UK-focused investments could increase concentration without the investor necessarily realising it.

A bull market can therefore be an appropriate time to review the overall balance of your wealth. Rather than asking which investment has performed best, consider whether your assets are positioned appropriately for your objectives, risk tolerance and long-term plans.

What Should UK Expats Do During A Bear Market?

A bear market can be unsettling, particularly when the value of an investment portfolio falls sharply and financial news becomes increasingly negative. However, falling markets are a normal part of investing, and a downturn does not automatically mean that a long-term investment strategy has failed.

For UK expats, a bear market can require additional consideration because investment performance may interact with currency movements, overseas income, pensions, property and plans to return to the UK. Rather than reacting to short-term headlines, it can be more helpful to step back and assess whether your overall financial plan still reflects your circumstances and objectives.

1. Revisit Your Financial Plan

When markets fall, the first question should not necessarily be, “Should I sell?” Instead, consider whether anything fundamental has changed about your financial circumstances or objectives.

For example, suppose you have a £250,000 investment portfolio and the market falls by 20%. Its value could temporarily decline to £200,000. While a £50,000 fall can understandably feel significant, the impact on your long-term plan depends on factors such as when you need the money, your other sources of wealth and income, and whether you can remain invested.

If you are 30 years from retirement and continue to receive a regular salary, a temporary decline may have a very different effect from the same decline experienced by someone who needs to withdraw a large amount from their portfolio within the next year.

For UK expats, it is also worth considering whether your circumstances have changed since your investment strategy was originally established. For instance:

• Have you changed your intended retirement date?

• Are you planning to return to the UK?

• Have your income or employment circumstances changed?

• Do you now have significant financial commitments overseas?

• Have your pension or property arrangements changed?

• Do you expect to need more of your savings in the short term?

If the answers are no, a market decline may simply represent a period of volatility within an otherwise appropriate long-term strategy. If your circumstances have changed, however, the downturn may be a useful prompt to review your plan.

The objective is not to ignore falling markets. Instead, it is to distinguish between market volatility and a genuine change in your financial needs.

2. Avoid Trying To Predict The Exact Bottom

One of the biggest challenges during a bear market is knowing when the decline will end. Investors may be tempted to sell while markets are falling and wait until conditions appear safer before investing again.

The problem is that markets can recover before confidence returns.

For example, imagine an investor has £100,000 invested and sells after a 25% fall, leaving £75,000 in cash. If the market subsequently rises by 20%, the £75,000 would become £90,000 if fully invested in the recovering market — still £10,000 below the original £100,000.

The investor would then need a further gain of approximately 11.1% just to recover from £90,000 to £100,000.

This illustrates why timing the market can be difficult. An investor needs to make two decisions correctly: when to get out and when to get back in.

There is also a psychological problem. After a significant fall, investors may wait for reassuring economic news before returning to the market. However, by the time the outlook feels comfortable again, asset prices may already have recovered considerably.

For long-term investors, a more disciplined approach can therefore be preferable to trying to identify the precise market bottom. The appropriate strategy will depend on individual circumstances, but it should generally be based on the purpose of the investment rather than an attempt to predict short-term market movements.

3. Review Your Portfolio's Diversification

A bear market can reveal weaknesses in a portfolio that were less obvious during a period of rising prices.

When almost everything is performing well, concentration can be easy to overlook. However, a downturn may demonstrate that too much of your wealth depends on a particular company, sector, country or asset class.

For example, imagine an expat has £200,000 invested, with £120,000 — or 60% — concentrated in one sector. If that sector falls by 30% while the remainder of the portfolio remains unchanged, the overall portfolio could lose approximately £36,000.

That is a significant reduction created by one area of concentration.

For UK expats, diversification should also be considered across their wider financial position. You may have investments in one country, a pension in another, property somewhere else and income in a fourth currency.

Consider reviewing:

• Investment diversification: Are you overly exposed to one company, sector or asset class?

• Geographical diversification: Is your portfolio too dependent on one country's economy?

• Currency exposure: How would exchange-rate movements affect the sterling value of your wealth?

• Property exposure: Does property already make up a large proportion of your overall assets?

• Pension exposure: Do your pension investments duplicate other investments you already hold?

• Income sources: Would a market downturn significantly affect your ability to meet regular expenses?

Diversification cannot prevent losses during a bear market, and different investments can fall simultaneously. Nevertheless, a well-considered spread of assets can help reduce the risk that one investment or market determines the outcome of your entire financial plan.

A downturn can therefore provide an opportunity to assess whether your portfolio is diversified in practice, rather than simply appearing diversified because it contains several individual investments.

4. Maintain Appropriate Liquidity

Liquidity refers to how easily you can access money when you need it. This becomes particularly important during a bear market because selling investments after a significant fall can turn a temporary decline into a permanent loss.

For example, suppose an expat has £100,000 invested and the portfolio falls by 30%, reducing its value to £70,000. If they need £20,000 immediately and have no other accessible savings, they may have to sell investments while prices are depressed.

By contrast, maintaining an appropriate level of accessible cash for foreseeable expenses can provide greater flexibility. It may allow an investor to meet short-term commitments without immediately selling long-term investments during a market downturn.

The appropriate amount of liquidity will vary considerably. Someone with a stable salary may have different requirements from someone who is retired and relies primarily on their investments for income.

For UK expats, liquidity planning can also involve multiple currencies. If you live overseas and your regular expenses are paid in a local currency, holding all your accessible savings in pounds sterling could expose you to exchange-rate movements when you need to convert the money.

It may therefore be useful to consider:

• Which currency you use for everyday spending

• Which currency your future liabilities are denominated in

• How much cash you may need in the short term

• Whether you have sufficient emergency reserves

• Whether you expect to make a major purchase or move country

• How much of your portfolio you expect to draw during retirement

Ultimately, the purpose of liquidity is not to predict the next market decline. It is to ensure that you are not forced into an investment decision simply because you need cash at an inconvenient time.

For UK expats, having an appropriate balance between accessible savings and long-term investments can therefore provide valuable financial flexibility during both bull and bear markets.

Bull Vs Bear Markets: What Should Different UK Expats Consider?

Market conditions can affect investors differently depending on their age, financial position and future plans. A bear market may be a relatively minor setback for someone with several decades until retirement, but it could require much more careful planning for someone who expects to start drawing heavily from their investments within the next few years.

For UK expats, these differences can become even more important because financial plans may involve several countries, currencies, pensions and property holdings. Therefore, rather than asking what everyone should do during a bull or bear market, it is more useful to consider how market conditions interact with different stages of an expat's financial journey.

Young UK Expats Building Long-Term Wealth

Young UK expats who are still building their careers may have several decades before they need to access their investments. As a result, short-term market movements may have less influence on their ultimate financial outcome than they would for someone approaching retirement.

For example, suppose a 30-year-old expat invests £500 per month and experiences a significant market downturn early in their investment journey. The value of their existing investments may fall, but they still have many years in which to continue contributing and potentially benefit from future market recoveries.

Regular contributions can also mean that the investor buys more units when prices are lower and fewer when prices are higher. This approach, sometimes referred to as pound-cost averaging, does not guarantee a profit or eliminate investment risk, but it can reduce the importance of trying to identify the perfect time to invest.

Young expats should nevertheless avoid assuming that a long investment horizon means risk does not matter. Their strategy should still reflect their circumstances, objectives and ability to tolerate losses.

It can also be useful to establish good financial habits early, including:

• Building an appropriate emergency fund

• Investing regularly where suitable

• Maintaining a diversified portfolio

• Understanding pension arrangements

• Considering currency exposure

• Reviewing investments periodically rather than reacting to daily market movements

For expats, starting early can also provide more time to understand how their financial position may change if they eventually return to the UK or settle permanently overseas.

Mid-Career Expats

Mid-career expats often have a more complex financial position because they may have accumulated assets in several countries while their future plans are becoming clearer.

For example, an expat might have £150,000 in UK pension assets, £75,000 in overseas investments, £50,000 in savings and property worth £400,000. Looking at each asset separately may not reveal how much risk the household is actually taking.

A bear market could reduce the value of investment assets, while currency movements could change the sterling value of overseas holdings. At the same time, property values, pension investments and other assets may behave differently.

This makes a wider portfolio review particularly valuable.

Mid-career expats may wish to consider:

A bull market can also be a useful opportunity to review portfolios before a downturn occurs. Conversely, a bear market can highlight areas of excessive concentration or risk that were less apparent when asset prices were rising.

For mid-career expats, the objective should therefore be to ensure that different parts of their financial position work together rather than managing each pension, investment or property holding in isolation.

Expats Approaching Retirement

Market conditions can become increasingly important as retirement approaches because the investment horizon becomes shorter and the need to access capital or generate income becomes more immediate.

Consider an expat aged 62 with a £500,000 investment portfolio who expects to retire at 65. A 25% market fall would reduce the portfolio to approximately £375,000.

A £125,000 decline could materially affect their retirement plans, particularly if they need to withdraw money shortly afterwards.

This does not necessarily mean that someone approaching retirement should avoid investment risk altogether. Instead, the investment strategy should take into account the timing and size of expected withdrawals.

For example, someone may need £40,000 a year to support their retirement lifestyle. If they need to sell a large proportion of their growth assets immediately after a substantial market fall, they could potentially lock in losses and leave fewer assets available to participate in a subsequent recovery.

This is why retirement planning should consider more than the total value of a portfolio. It should also examine:

• Expected retirement income

• Planned withdrawals

• Pension income

• Cash requirements

• Investment risk

• Time horizon

• Inflation

• Currency exposure

• Intended country of residence

For UK expats, the currency question can be particularly important. If retirement spending will take place in pounds sterling but investment income is generated in another currency, exchange-rate movements can affect the amount available to spend.

Similarly, someone intending to remain overseas may have very different currency requirements from an expat planning to return to Britain.

Approaching retirement is therefore an important point to review how investments, pensions, savings and future income fit together.

Retired UK Expats

For retired expats, the priority often shifts from accumulating wealth to using it sustainably.

A retired investor may rely on pensions, investment income, savings or a combination of these to meet regular living costs. Consequently, a significant bear market can feel more immediate because there may be less time to wait for markets to recover.

For example, imagine a retired expat has £300,000 invested and withdraws £20,000 each year. If the portfolio falls by 20%, its value could decline to £240,000 before withdrawals or other changes are considered.

If the investor continues taking £20,000 from the portfolio while asset prices remain depressed, the percentage of the remaining portfolio being withdrawn becomes increasingly significant.

This is why retirement planning should consider the relationship between investment returns, withdrawals and timing rather than focusing only on average long-term returns.

Retired expats should also consider the currency in which they receive income and pay expenses. Someone living in France may have euro-denominated expenses, while someone returning to the UK may eventually need substantially more sterling.

Other considerations can include:

• Maintaining appropriate accessible savings

• Managing investment risk

• Planning sustainable withdrawals

• Reviewing pension income

• Considering inflation and purchasing power

• Understanding currency exposure

• Planning for healthcare and later-life costs

• Considering inheritance and succession objectives

The right approach will vary from person to person. A retired expat with a secure pension covering most living expenses may have different investment requirements from someone who relies heavily on their investment portfolio for day-to-day spending.

Ultimately, the goal is to ensure that the investment strategy supports the lifestyle the portfolio is intended to fund.

The Key Difference Is Your Financial Position, Not Just The Market

The same bull or bear market can produce very different consequences for two investors.

For example:

These examples are purely illustrative, but they demonstrate an important principle: market conditions do not determine the right financial strategy on their own.

Your age, income, assets, liabilities, investment horizon, spending requirements, tax position, currency exposure and future plans all matter.

For UK expats, this wider perspective is particularly important because moving between countries can change the financial planning picture considerably. A strategy that was appropriate while working overseas may need to be reviewed when returning to the UK, approaching retirement or settling permanently in another country.

Therefore, when considering bull vs bear markets, the most useful question is not simply, “What is the market doing?” Instead, ask:

“What does this market environment mean for my financial plan?”

That shift in perspective can help investors make more measured decisions and remain focused on their longer-term objectives rather than reacting to short-term market sentiment.

The Role of Diversification in Bull and Bear Markets

Diversification remains relevant in both environments.

During a bull market, diversification can help prevent excessive concentration in investments that have recently performed strongly.

During a bear market, diversification can help reduce dependence on a single market or asset class.

However, diversification does not guarantee a profit or prevent losses.

Different investments can fall at the same time, particularly during periods of significant financial stress.

The purpose is not to create a portfolio that never falls.

Instead, diversification can help create a portfolio in which no single investment or market movement determines the entire financial outcome.

For expats, this may involve looking beyond geographical diversification and considering the relationship between investments, currencies, pensions, property and future spending.

Why Market Timing is So Difficult

It is natural to want to know whether the market is about to rise or fall.

Unfortunately, consistently predicting short-term market movements is extremely difficult.

Even professional investors cannot know with certainty when a bull market will end or when a bear market will begin.

There is also a psychological problem.

When markets rise, investors can become more confident just as valuations become more demanding.

When markets fall, investors can become more fearful just as opportunities may begin to emerge.

This creates a potentially damaging cycle:

Buy because prices are rising → become more confident → take more risk → prices fall → become fearful → sell after losses → miss the recovery.

A disciplined investment strategy aims to reduce the influence of this emotional cycle.

What UK Expats Can Do Before The Next Market Downturn

No one can know exactly when the next bear market will begin. However, investors can prepare for periods of market volatility by making sure their financial plans are designed to cope with changing conditions.

For UK expats, preparation can be particularly valuable because financial affairs often span several countries, currencies and investment arrangements. Taking time to review your position before markets fall can reduce the likelihood of making rushed decisions when uncertainty increases.

The Financial Conduct Authority emphasises the importance of having an appropriate financial foundation, understanding investment risk, diversifying and taking a long-term approach.

Here are ten areas UK expats can consider before the next significant market downturn.

1. Review Your Financial Objectives

Start by making sure you are clear about what your investments are intended to achieve. Your objectives might include retirement, purchasing property, funding education, building long-term wealth or leaving assets for your family.

For example, an expat investing £300,000 for retirement in 20 years may have a very different investment strategy from someone who expects to use £100,000 of their portfolio to purchase a property within two years.

The important point is that investment decisions should follow your objectives rather than the latest market headlines.

It can therefore be useful to ask:

• What am I investing for?

• When will I need the money?

• How much will I potentially need?

• Will I spend the money in pounds sterling or another currency?

• Have my circumstances changed since I created my financial plan?

Reviewing these questions before a downturn can make it easier to remain focused if markets subsequently become volatile.

2. Review Your Time Horizon

Your investment time horizon can significantly influence how you approach market volatility.

Someone with 25 years before retirement may have more time to withstand temporary market falls than someone who expects to start withdrawing from their portfolio within two years.

For example, if a £200,000 portfolio falls by 25%, its value would temporarily fall to £150,000. An investor with a long time horizon may have more opportunity for the portfolio to recover, whereas someone who needs the full £200,000 shortly afterwards may face a more immediate problem.

This does not mean that long-term investors should ignore risk. Instead, your investment strategy should reflect how long you can realistically remain invested and when you expect to need access to your money.

For expats, also consider whether your time horizon could change because of an international move. Returning to the UK, retiring overseas or relocating to another country could all alter when and in which currency you need your assets.

3. Review Your Risk Profile

A market downturn can reveal whether your portfolio contains more investment risk than you are genuinely comfortable with.

It is easy to feel confident about risk when markets are rising. The more important test is how you would react if your portfolio declined significantly.

For example, if you have £400,000 invested and it falls by 30%, the value could decline by £120,000 to £280,000. Would you still be comfortable remaining invested, or would the loss cause you to abandon your strategy?

Risk should also be considered in the context of your wider financial position. Someone with a secure income, substantial cash reserves and many years until retirement may have a different capacity for investment risk from someone who relies heavily on their portfolio for immediate income.

The FCA notes that investment risk and potential returns are closely connected, while also emphasising the importance of finding an appropriate balance based on your wider circumstances.

For UK expats, that assessment should also consider currency, pensions, property and overseas financial commitments.

4. Review Your Capacity For Loss

Risk tolerance and capacity for loss are related, but they are not identical.

Your risk tolerance concerns how comfortable you are with investment fluctuations. Your capacity for loss considers the financial consequences if your investments fall significantly.

For instance, you might feel comfortable with a 30% market decline in theory. However, if losing £90,000 from a £300,000 portfolio would mean delaying retirement or selling your home, your financial capacity to absorb that loss may be limited.

This distinction becomes particularly important for expats approaching retirement or relying on investments to fund regular living costs.

Consider what would happen if your portfolio fell by:

• 10%

• 20%

• 30%

• 40%

For a £500,000 portfolio, those falls would represent:

These figures are illustrative rather than forecasts. However, they can help put potential volatility into monetary terms and make it easier to assess whether your current investment strategy remains appropriate.

5. Review Your Diversification

Diversification can help reduce reliance on any single investment, sector, asset class or geographical market. The FCA describes diversification as a way of spreading investment exposure so that poor performance in one area may have less impact on the overall portfolio.

For expats, diversification should extend beyond the investments in a single portfolio.

Consider your entire financial position.

You might, for example, have:

• A UK pension

• An overseas pension

• UK property

• Overseas property

• Sterling savings

• Investments denominated in another currency

• Employment income from an overseas employer

Although these assets may appear separate, they collectively make up your wealth.

A portfolio review should therefore ask whether you are unintentionally concentrated in a particular country, currency, sector or asset class.

Diversification cannot eliminate losses, but it can help prevent one investment or market from determining the outcome of your entire financial position.

6. Review Your Cash Reserves

Having appropriate accessible savings can be particularly valuable during a market downturn.

The reason is straightforward: if you suddenly need money while markets are falling, you may otherwise have to sell investments when their values are depressed.

For example, suppose you have £100,000 invested and the portfolio falls by 25% to £75,000. If you then need £20,000 for an unexpected expense and have no other accessible savings, you may have to sell investments after the decline.

By contrast, having an appropriate cash reserve can provide greater flexibility and reduce the likelihood of being forced into an investment decision at an inconvenient time.

The FCA recommends establishing an emergency cash fund before investing and notes that many experts suggest holding enough to cover several months of outgoings.

For expats, consider this in the context of your local cost of living and currency. If your everyday expenses are paid in euros, US dollars or another currency, your accessible cash strategy may need to reflect those spending requirements rather than simply focusing on pounds sterling.

7. Review Your Pension Arrangements

UK expats can accumulate pension arrangements across different countries during their working lives.

You may have a UK pension from previous employment while also contributing to an overseas retirement arrangement. You may also have changed countries several times, creating several separate pension pots.

Before the next market downturn, consider whether you understand:

• Where your pensions are held

• What investments they contain

• What fees apply

• What currencies they are exposed to

• When benefits can be accessed

• How they fit into your wider retirement strategy

A bear market can make pension values look particularly concerning because retirement savings can represent a substantial proportion of an expat's wealth.

However, the appropriate response depends on your retirement timeline and circumstances. Someone decades from retirement may have a very different position from someone who plans to begin drawing pension benefits within the next year.

Pension decisions can also have tax and cross-border implications, so expats should consider the rules that apply in their country of residence as well as relevant UK rules.

8. Review Your Currency Exposure

Currency risk is an important consideration for internationally mobile investors.

If you live overseas, you may earn income in one currency, hold investments in another and eventually spend your wealth in a third.

For example, imagine you hold an overseas investment worth the equivalent of £200,000. If the underlying investment remains unchanged but the exchange rate moves against you, its value when converted into pounds sterling could fall.

The reverse can also happen.

This means your investment return in its original currency may not be the same as your return when measured in sterling.

Before the next market downturn, consider mapping out:

The objective is not necessarily to eliminate currency exposure. Instead, it is to understand how exchange-rate movements could affect your financial plan.

9. Review Your Tax Position

Moving overseas can change how your income, investments, pensions and other assets are taxed.

Your country of tax residence may affect the treatment of investment income and gains, while tax treaties can influence how certain income is treated between jurisdictions.

This makes tax planning particularly relevant when reviewing an expat investment strategy.

For example, an investment structure that was suitable while you were UK resident may not necessarily remain the most appropriate after moving abroad.

Similarly, returning to the UK can change the tax considerations surrounding overseas investments and income.

Tax rules are highly dependent on individual circumstances and can change over time. Therefore, expats should avoid assuming that a strategy is automatically tax-efficient simply because it worked in the past.

Before making significant changes, consider whether you need advice from appropriately qualified financial and tax professionals in the relevant jurisdictions.

10. Review Your Intended Country Of Retirement

Your eventual country of retirement can influence almost every part of your financial plan.

You may currently live overseas but intend to return to the UK. Alternatively, you may plan to remain abroad permanently or move to another country after finishing work.

These decisions can affect:

• The currency you will ultimately need

• Your expected cost of living

• Pension planning

• Tax considerations

• Healthcare costs

• Property decisions

• Investment requirements

• Estate and succession planning

For example, an expat who expects to retire in the UK may ultimately need substantial sterling-based spending power. Someone planning to retire permanently overseas may have very different currency and income requirements.

It is therefore worth reviewing your intended destination before a market downturn rather than making major financial decisions during one.

Preparing Before The Downturn Can Make The Downturn Easier To Manage

Preparing for a bear market does not mean predicting when one will occur.

Instead, it means making sure your financial arrangements are sufficiently robust to cope with periods of uncertainty.

A useful pre-downturn review might look like this:

Taking these steps before markets become unsettled can make it easier to distinguish between short-term market noise and genuine changes that require action.

Most importantly, preparation can help you make decisions from a position of planning rather than fear. The FCA similarly encourages investors to understand their risk, diversify and take a long-term view rather than attempting to react to short-term market movements.

For UK expats, this broader approach can be especially valuable because your financial plan may need to work across borders, currencies and different stages of life.

How Benjamin Sharvell IFA Helps UK Expats Plan for Different Market Conditions

As a Senior Adviser and Professional Financial Planner, I work with expat clients to help them plan, consolidate, grow and position their wealth around their medium and long-term objectives.

My own experience as an expat has given me a practical understanding of the opportunities and challenges that come with living and working internationally.

Depending on your circumstances, financial planning may involve several interconnected areas.

Future Planning

Future planning is about turning your long-term ambitions into a practical financial strategy. Rather than focusing solely on what markets are doing today, Benjamin can help you consider how your investments and wider wealth can support the life you want in the future.

Benjamin can help you review and structure your financial position around goals such as:

• Retirement planning: Helping you understand whether your current investments, pensions and savings are on track to support your desired retirement lifestyle.

• Education fee planning: Helping you prepare for future education costs, particularly where children may attend schools or universities in different countries.

• Pension planning: Reviewing your existing pension arrangements and considering how they fit within your wider retirement strategy.

• Succession planning: Helping you consider how your wealth could be structured for the future and how your assets may eventually pass to your family.

The benefit of this broader approach is that a temporary bear market does not have to dictate your long-term decisions. Instead, your investment strategy can be considered in the context of the objectives it is designed to achieve.

Savings Solutions

Your investment portfolio is only one part of your financial position. You may also need accessible savings for emergencies, planned expenditure or future opportunities.

Benjamin can help you consider how your savings should be structured around your circumstances, including whether you need regular savings, a solution for a larger lump sum or access to banking and foreign exchange services.

Savings solutions can include:

• Regular savings: Helping you establish a consistent approach to building wealth over time.

• Lump-sum solutions: Helping you consider how a larger amount of available capital could be structured according to your objectives and time horizon.

• Foreign exchange: Helping you consider the impact of currency conversion when moving money between countries.

• Offshore banking: Helping eligible expat clients consider international banking solutions where appropriate.

The objective is to make your savings work alongside your investments rather than treating the two separately. This can be particularly useful during volatile markets, when having appropriate accessible savings may reduce the need to sell long-term investments at an inconvenient time.

Pension Solutions

Pensions can become particularly complicated when you have worked in several countries.

A UK expat might have accumulated a UK pension before moving overseas and then joined another retirement arrangement while working abroad. Over time, this can leave an individual with several pensions, different investment options, different charges and potentially different tax considerations.

Benjamin can help you understand how your pension arrangements fit into your wider financial plan and whether they remain suitable for your circumstances.

Depending on your situation and eligibility, pension planning may involve considering:

• UK pensions

• Swiss pensions

• Irish and European pensions

• Self-Invested Personal Pensions (SIPPs)

• Qualifying Recognised Overseas Pension Schemes (QROPS)

• Qualifying Non-UK Pension Schemes (QNUPS)

The appropriate solution will depend on factors such as your country of residence, retirement objectives, existing pension arrangements, investment requirements and applicable tax rules.

This can be particularly important during bull and bear markets. A pension should not necessarily be changed simply because its value has fallen. Instead, Benjamin can help assess the underlying investments, risk level, costs and role of the pension within your overall retirement strategy.

Where international tax or technical issues need specialist input, appropriate tax and technical advisers can also be consulted as part of the wider planning process.

Property Solutions

Property is often a significant part of an expat's wealth.

You may own a property in the UK that you retained after moving abroad, purchase property in your country of residence, or consider investing in property as part of your long-term strategy.

Benjamin can help you consider property within the context of your overall financial position rather than viewing it in isolation.

Property solutions can include:

• Property investments: Helping you assess how property fits within your wider investment strategy and long-term objectives.

• UK mortgages: Helping UK expats consider mortgage requirements connected with UK property.

• International mortgages: Helping you explore financing considerations when purchasing property overseas.

The wider objective is to understand how property interacts with your investments, pensions, savings, liabilities and future plans.

This can be particularly useful during changing market conditions because property and financial markets do not necessarily move in the same way. Looking at your complete balance sheet can therefore provide a clearer picture of your overall exposure and financial resilience.

Insurance Solutions

Financial planning is not only about growing wealth. It is also about protecting your family and your financial objectives if circumstances change unexpectedly.

For expats, protection planning can be particularly important because healthcare systems, insurance markets and financial obligations can vary significantly between countries.

Benjamin can help clients consider protection needs such as:

• Health insurance: Helping you consider appropriate healthcare protection for your circumstances and country of residence.

• Life insurance: Helping you consider how your family or financial commitments could be affected if you were to die unexpectedly.

Protection planning therefore complements investment planning. While investments can help you build wealth, appropriate insurance can help protect the financial plan when unexpected events occur.

Ready To Take A More Strategic Approach To Your Wealth?

Bull and bear markets are an unavoidable part of investing, but you do not have to navigate them without a plan.

Benjamin Sharvell IFA provides personalised financial planning and wealth management for expat clients, helping you make informed decisions based on your circumstances and long-term goals.

Get in touch with Benjamin Sharvell today for free to discuss how a personalised financial plan could support your goals!

Frequently Asked Questions About Bull Vs Bear Markets

1. What Is The Difference Between A Bull And Bear Market?

A bull market generally describes a sustained period of rising investment prices and positive investor sentiment, while a bear market describes a prolonged period of falling prices and weaker sentiment. A commonly used definition considers a rise or fall of 20% from a recent market low or high as a bull or bear market, respectively. However, market conditions are more nuanced than a single percentage, and different markets can behave differently.

2. How Do Bull And Bear Markets Affect UK Expats?

Bull and bear markets can affect UK expats through changes in investment values, pension funds and other assets. Expats may also face currency movements if their investments, income and spending are denominated in different currencies. Therefore, the impact of a market downturn can vary depending on where you live, where your assets are held and when you expect to need your money.

3. Should UK Expats Sell Their Investments During A Bear Market?

Not necessarily. Selling during a market decline can turn a temporary fall in value into a permanent loss, particularly if markets subsequently recover. Instead, consider whether your financial objectives, time horizon, income needs or personal circumstances have changed. If they have not, your existing investment strategy may still be appropriate, although individual circumstances should always be considered.

4. Is A Bull Market A Good Time To Invest?

A bull market can provide opportunities, but rising prices do not guarantee that investments will continue to perform well. Rather than investing simply because markets are rising, UK expats should consider their objectives, time horizon, risk tolerance, capacity for loss and overall diversification. A long-term investment strategy should not depend on trying to predict exactly when markets will rise or fall.

5. How Can Benjamin Sharvell Help UK Expats During Bull And Bear Markets?

Benjamin Sharvell can help UK expats develop a personalised financial strategy that considers their investments alongside pensions, savings, property, insurance, currency exposure and long-term objectives. As a globally experienced financial adviser and an expat himself, Benjamin understands the additional considerations involved in managing wealth across borders and can provide guidance designed around each client's individual circumstances.