Bear market
Also called: bearish
A long period in which share prices are generally falling and investors are pessimistic, often taken to mean a fall of 20% or more from a peak.
Bear markets can be triggered by recessions, financial crises, geopolitical shocks or the end of a bubble. A widely used convention, not an official rule, calls a fall of about 20% or more from a recent peak a bear market.
Recovering from a bear market can take a long time, because a loss needs a larger percentage gain to recover.
Example
An index that falls from 20,000 to 15,000 has dropped 25%, which by the usual convention is a bear market. It now needs a 33.3% rise to return to 20,000.
Learn more in these lessons
- Bull markets, bear markets, corrections and crashesWhat are bull and bear markets, and how bad can a fall get?
- Common stock market mythsWhich common beliefs about the stock market are wrong?
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