Bear Market

Loading the player...

What is a 'Bear Market'

A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment to be self-sustaining. As investors anticipate losses in a bear market and selling continues, pessimism only grows. Although figures can vary, for many, a downturn of 20% or more in multiple broad market indexes, such as the Dow Jones Industrial Average (DJIA) or Standard & Poor's 500 Index (S&P 500), over at least a two-month period, is considered an entry into a bear market.

BREAKING DOWN 'Bear Market'

A bear market should not be confused with a correction, which is a short-term trend that has a duration of less than two months. While corrections are often a great place for a value investor to find an entry point, bear markets rarely provide great entry points, as timing the bottom is very difficult to do. Fighting back can be extremely dangerous because it is quite difficult for an investor to make stellar gains during a bear market unless he or she is a short seller.

RELATED TERMS
  1. Bear Tack

    A decline in the price of a stock, sector or market that may ...
  2. Bear Raid

    The illegal practice of ganging up to push a stock's price lower ...
  3. Buy Signal

    An event or condition that alerts investors to purchase a particular ...
  4. Bear Market Rally

    A period in which prices of stocks increase during a bear market. ...
  5. Recession Proof

    A term used to describe an asset, company, industry or other ...
  6. Slow Market

    1. A market that currently exhibits low trading volumes and/or ...
Related Articles
  1. Mutual Funds & ETFs

    The 3 Best Mutual Funds to Short Global Equities (GRZZX, UXPIX)

    Discover the three best mutual funds that bearish investors can use to short global markets, and learn which fund is best suited for your portfolio.
  2. Stock Analysis

    3 Consumer Discretionary Stocks Near Their 52-Week Highs Worth Selling (MCD, SBUX)

    Understand why it's a good time to consider selling consumer discretionary stocks, particularly those trading near their 52-week highs.
  3. Mutual Funds & ETFs

    Top 10 Most Traded Leveraged ETFs (UVXY, SDS)

    Discover how leveraged ETFs work and why they are popular among traders. Learn about the 10 most traded leveraged ETF in the marketplace today.
  4. Investing Basics

    5 Questions First Time Investors Should Ask in 2016

    Learn five of the most important questions you need to ask if you are a new investor planning on starting an investment program in 2016.
  5. Stock Analysis

    3 Popular Financials Stocks in 2015 (WFC, COF)

    Find out about some of the popular financials stocks in 2015, why they have become popular and whether they will remain popular going forward.
  6. Stock Analysis

    The Biggest Risks of Investing in Chipotle Stock (CMG)

    Learn about some possible risks for Chipotle, one of America's most popular and fastest-growing food chains and leader of the "casual dining" experience.
  7. Economics

    China's Connection to the Recent Gold Crash

    Learn about the connection between the Chinese stock market crash and gold's crash. China is the world's largest source of gold demand.
  8. Trading Strategies

    3 Ways Price Momentum Can Burn Your Portfolio

    Momentum traders are always trying to ride the herd. In these three situations, however, they may end up getting trampled.
  9. Options & Futures

    Profiting In Bear And Bull Markets

    There are many ways to profit in both bear and bull markets. The key to success is using the tools for each market to their full advantage.
  10. Active Trading

    Play The Market Like Tiger Plays Golf

    Score big by taking Tiger Woods' approach to golf and applying it to your portfolio.
RELATED FAQS
  1. Where do investors tend to put their money in a bear market?

    A bearish market is traditionally defined as a period of negative returns in the broader market to the magnitude of between ... Read Answer >>
  2. How can I hedge my portfolio to protect from a decline in the retail sector?

    Understand how savvy investors use noncyclical and countercyclical sectors to hedge against exposure to the volatile retail ... Read Answer >>
  3. How can I profit from a decline in the telecommunications sector?

    Learn the ways savvy investors use short-selling techniques and put options to profit from declines in the telecommunications ... Read Answer >>
  4. How does the risk of investing in the aerospace sector compare to the broader market?

    Learn how the risk of investing in the aerospace sector compares to the broader market and how investors use this information ... Read Answer >>
  5. What option strategies can I use to earn additional income when investing in the ...

    Discover how risk-averse investors need to build a retirement portfolio. The major factors are diversification and avoiding ... Read Answer >>
  6. What are the early warning signs of a tech bubble?

    Learn why the book-to-bill ratio in the electronic sector is important in evaluating economic health and how this measure ... Read Answer >>
Hot Definitions
  1. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  2. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  3. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  4. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  5. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  6. Economies Of Scale

    Economies of scale is the cost advantage that arises with increased output of a product. Economies of scale arise because ...
Trading Center