Bear Market
A bear market is a financial market condition characterized by falling prices, investor pessimism, and negative sentiment, typically defined as a 20% or greater decline from recent highs.
Get personalized explanations
š¬ Video Explanation
š”
Exam Tip
Bear = DOWN (claws swipe down). 20% decline = official bear market.
What is a Bear Market?
A bear market is a period of declining prices in a financial market, typically characterized by a drop of 20% or more from recent highs. Bear markets are often accompanied by economic recession and high unemployment.
Characteristics of Bear Markets
| Indicator | Bear Market Sign |
|---|---|
| Price Trend | Falling prices (20%+ from highs) |
| Investor Sentiment | Pessimistic, fearful |
| Economic Conditions | Recession, rising unemployment |
| Trading Volume | High selling activity |
| Corporate Earnings | Generally declining |
Bear Market Phases
- Distribution - Smart money sells, public still buying
- Panic - Sharp drops, widespread selling
- Stabilization - Selling exhausts, bottom forms
Historical Bear Markets
| Period | Duration | S&P 500 Loss |
|---|---|---|
| 2007-2009 | 17 months | -57% |
| 2000-2002 | 31 months | -49% |
| 2020 (COVID) | 1 month | -34% |
Why "Bear"?
The term comes from how a bear attacks-by swiping its claws downward, symbolizing falling prices.
Bear Market Strategies
- Don't panic sell
- Consider defensive stocks (utilities, healthcare)
- Look for buying opportunities
- Maintain diversification
- Review risk tolerance
Study This Term In
Related Terms
Learn More with AI
10 free AI interactions per day
Stay Updated
Get free exam tips and study guides delivered to your inbox.