The stock market's dizzying moves have forced investors back to the books to seek clarity and understanding. That's where Investopedia comes in. To identify the investing terms readers were looking up more than usual during recent volatility, we compared reader interest, or what we call "search traffic," from the first week of October — right after major indexes reached all-time highs and we first saw signs of market turbulence — and the last week of December, when the markets neared bear territory. These investing terms showed the greatest spikes in interest over that two-month period.
Investors were feverishly looking up "bear market" in the run-up to 2019 after the S&P 500 index's decline topped 20% from its 52-week high and officially entered bear market territory on Dec. 24 . The American Association of Individual Investors' weekly survey revealed on Dec. 27 that 50.3% of individual investors were bearish on the stock market short term while 31.55% were bullish. Interestingly, we saw below-average interest in this term until the second week of December.
The stock market's steady decline forced investors to sell stocks and run for cover. In December, a massive $75.5 billion was pulled from U.S. stock mutual funds and exchange-traded funds, the largest outflow ever in a single month, according to Lipper data that goes back to 1992. A lot of that money moved to cash or money markets - a sign that investors may be ready to put money back to work post-capitulation.
Are we witnessing a deep correction or is this a dreaded bear market? (Or, is it a glitch? We don't have a definition for that on our website, yet.) This question was on many investors' minds as search interest in the word "correction" jumped in the run up to the end of the year. The last time "correction" saw a surge in search traffic was in mid - and late - October 2018. As a reminder, a correction is a 10% decline from a security or index's most recent high.
Google searches for "correction vs bear market" reached the highest levels ever in November 2018, which is commensurate with what we tracked on Investopedia.
Concern about the possible end of expansion and a looming recession grew in December, especially after the first week presented us with a bad omen: an inverted yield curve, known to be a predictor of recessions. They can also cause recessions, according to a Dec. 27 blog from the Federal Reserve Bank of St. Louis, since they lead to banks tightening their lending standards.
Adding to these fears, on Dec. 19 the Fed raised interest rates for the fourth time in 2018 and signaled that there would be more rate hikes in the future.
Searches for "bubble" fell as investors found themselves in a down market. It was mighty popular throughout the summer as the stock market continued making new highs and companies like Apple (AAPL) had market values over $1 trillion. There's one less thing to worry about.
Other notable fear-based investing terms that saw bumps in traffic during the final weeks of December were "deflation," "volatility," "short," "short selling", "naked shorting," "short covering" and "short sale."