Bull vs. Bear: Public Markets and Private Investments

Bull markets, bear markets, market corrections, market crashes—financial jargon gets thrown around in headlines and chatter around public markets, but what’s going on beyond the noise?

It can be difficult to discern what information to take into consideration, especially when there are significant geopolitical events occurring, like the tariffs from the U.S., shifting global trade relations, increasing concerns around inflation, and mounting challenges facing Canadian financial systems. And when the information is specific to public markets, it may not be clear how those conditions could affect your private alternative investments in Canada. Understanding how these investments respond differently to changing market conditions is key to seeing the full picture, especially for investors who look to private alternatives for stability and long-term performance.

Bull markets vs. bear markets

So, what are bull and bear markets? And when a financial analyst says something is bullish or bearish, what does that mean?

While broader economic factors may align with bull and bear markets, such as employment rates and overall economic performance rising or falling with bull and bear markets, respectively, it’s not always the case. For example, we are currently in a bull market with rising stock prices and yet, since the spring of 2024, the unemployment rate has been higher than its pre-COVID-19 average. For comparison’s sake, the current bull market has been in effect since April 2020.

Historically in Canada, bull markets have outpaced bear markets, not just in how long they last, but also with the fluctuation of asset prices. Specifically, there have been 10 bull and bear markets since 1957, with bull markets seeing an average increase of 173% in asset prices and lasting an average of 72 months, while bear markets have only seen an average market decline of 29% and last on average of 11 months.

How are private alternative investments affected by bull and bear market cycles?

For investors exploring ways to diversify beyond traditional stocks and bonds, private alternative investments, such as private real estate investment trusts (REITs), or renewable infrastructure funds, can offer a different approach to managing risk and return. These investments are typically considered less liquid and are not publicly traded, which means they aren’t priced or traded daily like stocks, and may behave differently across market cycles.

Private alternative investments are generally less influenced by day-to-day public market performance; however, they can still be affected by broader economic factors, such as interest rates and inflation, that can contribute to bull and bear market trends. Specifically, publicly traded stock prices can be affected by a myriad of things, from company news, like reporting higher-than-expected earnings, to more macro factors, like geopolitical events or industry-wide performance. A unique characteristic of stock markets is that their performance can also be significantly affected by non-quantitative factors, like investor sentiment. When you’re feeling confident in the market, you’re more likely to buy more stocks, which can make prices rise. Conversely, in a bear market, investor confidence can fade, and you may sell stocks for less than they were previously valued in order to prevent further erosion to your overall portfolio value. In both cases, bull and bear markets can become self-fulfilling prophecies, as how investors perceive the market based on current and anticipated conditions can influence how they buy and sell at that time, thus reinforcing those existing trends.

Depending on the type of private alternative investment, factors that impact publicly traded markets can also impact private ones, but generally the extent and timing of that impact is where the difference lies. Let’s take equity, for example. When you buy stocks in a public company, the performance of the industry that company works within can have an instantaneous effect on the price of the stocks if investor sentiment shifts enough to prompt selling or buying, even if the company’s fundamental value hasn’t been similarly affected. When you invest in private equity, the value of your investment if you were to sell your equity stake may also be affected by these economic factors, but the change in valuation won’t be as swift. It’s in this way that private investments tend to be more buffered from the effects of bull and bear markets, as they aren’t as susceptible to investor knee-jerk reactions to broader economic headlines like publicly traded assets can be.

Understanding private REIT vs. public REIT performance in bull and bear markets

How the value of a REIT holds up during bull and bear market swings will depend on the type of real estate assets held in the trust. For example, not all REITs that hold retail properties will weather bull and bear markets the same, regardless if they’re private or public. In a bear market, where economic factors are poor, REITs that focus heavily on retail assets that rely on consumer discretionary spending, like in stores specializing in electronics, sporting goods, and fashion, may have trouble maintaining their occupancy levels as tenants struggle with a reduction in consumer spending and doors shutter. Conversely, retail REITs that centre their strategy on essential retail, like grocery stores, pharmacies, and banking, will tend to maintain tenant occupancy as consumer traffic remains consistent in sluggish economic conditions.

As with publicly traded stocks and private equity, the impact of shifts to a bull or bear market can be felt by both private and public REITs; however, how much of an impact and the timing of that impact will be different, given how these two investment products are valued and how investors can interact with them. Specifically, the prices of publicly traded REITs are influenced by market sentiment, potentially leading to the REITs’ net asset value (NAV) being undervalued, whereas private REITs are valued using independent appraisal methods. This means that while publicly traded REIT stock prices can instantaneously change depending on how investors and other market participants react to current headlines and industry trends, private REIT unit values are only adjusted periodically based on quantitative analysis, which not only helps align pricing more closely with true value, but generally the valuation isn’t as volatile over the long-term.

Case study: Bulls, bears, and REITs in Canada

To see how market volatility affects private and public REITs and how these investment products hold up during bull and bear markets, we took average adjusted closing stock price information from some of the largest publicly traded apartment REITs in Canada and charted them against private Skyline Apartment REIT unit prices.

When comparing private Skyline Apartment REIT and the average public REIT against the backdrop of bull and bear market cycles experienced in Canada from January 2007 to December 2025, we can see a direct correlation between the public market volatility and the publicly traded REITs. Specifically, the average monthly stock prices we’re using for this comparison rose and fell in line with overall market trends, as you can see in the Private vs. Public REITs in Bull and Bear Markets graph. Conversely, Skyline Apartment REIT experienced steady growth throughout the timeframe we’re analyzing, regardless of whether we were in a bull or bear market. In fact, the Skyline Apartment REIT unit price increased the most during a bear market at the start of 2020, rising by 21.74%, while the public REITs were facing their biggest drop at the same time, falling 23.68%.

Beyond being buffered from public bull and bear market swings, Skyline Apartment REIT’s resilience through these cycles can also be attributed to its investment approach. Fundamentals, like Skyline Apartment REIT’s private ownership structure, its singular focus on multi-residential rental communities, an essential real estate subsector, its presence in secondary and tertiary markets, and its disciplined approach to debt management, helped bolster the performance of the underlying assets and secure the potential value for investors. This is in stark contrast to publicly traded REITs, where stock value is heavily influenced by broader market sentiment in addition to their fundamentals.

While past performance is not indicative of future results, these findings lend credence to the idea that specific private investment products, like Skyline Apartment REIT, can have an anchoring effect on portfolios, providing diversity that could offset public market uncertainties and price swings.

Next steps

Employing wealth preservation strategies in the face of volatile and unpredictable market swings is a smart move, especially in the geopolitical climate we find ourselves in currently. Here are some steps you may want to take to protect what you’ve earned and to help secure potential investment growth in the future, whether we’re in a bull or bear market:

1. Review your current portfolio with a trusted, professional advisor, considering which investments could be vulnerable to public market uncertainties and ensuring that you have other investments, like private REITs, that can potentially better weather the storm and balance any losses with steady growth.
2. Consider the fundamentals when selecting your investments, including the type of real estate held in any prospective REITs. For example, REITs like Skyline Retail REIT that lease predominantly to retail tenants focused on providing the essentials, instead of discretionary goods, can be a more stable choice given their clientele will still require their wares even during an economic downturn.
3. Private alternative investments with a history of stable returns and growth, like Skyline Apartment REIT, Skyline Industrial REIT, Skyline Retail REIT, can help diversify and anchor your portfolio, potentially buffering it from the volatility of public markets, while providing the opportunity for regular distributions or re-investment and compounding via a Distribution Re-Investment Plan (DRIP).
4. Potentially include growth-oriented funds in your portfolio, like Skyline Clean Energy Fund, which automatically re-invests all earnings and revenue earned from government-backed contracts back into the Fund, potentially increasing the unit value for investors, tax deferred, and fostering compounded growth.

Bull and bear markets are inevitable. What matters most is not trying to predict every market movement or trend, but building a portfolio designed to withstand the ebbs and flows. By combining investments that respond differently to changing economic conditions, you can help position yourself to stay on track in achieving your financial goals and long-term wealth growth, regardless if you’re facing a bull or a bear.

Bull vs. bear FAQs