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Investing 101: What is a bear market?
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Photo: copyright Eva Kröcher/Wikipedia.
A bear market is described as a market where there is a steady drop over an extended period of time. It is defined by investors becoming increasingly pessimistic about the market as it falls, then selling in anticipation of future downward trends. The selling perpetuates a vicious cycle where negative anticipations about the future fuel more selling, which in turn sends the market further down, and so on.
According to The Vanguard Group, "While there’s no agreed-upon definition of a bear market, one generally accepted measure is a price decline of 20% or more over at least a two-month period."
A bear market is the opposite of a bull market.
The picture to the right is a symbolic statue of a bear outside of the Frankfurt Stock Exchange.
Historical Example of Bear Markets
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