Definition
The term bear market refers to an extended period of time during which there is a decline in the value of equities traded on a stock market. While there is no strict definition, a decline of 20% or more in a market index would be considered a confirmation of a bear market.
Explanation
Generally, a decline of 20% or more in a market index, such as the S&P 500 or Dow Jones Industrial Average, over a period of at least 60 days would be classified as a bear market. As investor fear of capital losses grow, the sell-off of common stocks continues, and a pessimistic outlook for the market becomes widespread. Bear markets are typically the result of an economic recession. Historically, bear markets average around one year in duration.
Short-term declines in a market index are classified as "corrections." When a market experiences a correction, investors can oftentimes find many stocks selling for prices that represent a good value.
Related Terms
The term dead cat bounce refers to a temporary increase in a financial market, or individual security, after a sustained decline. Oftentimes, the phrase dead cat bounce refers to the temporary recovery of a security deemed to be of low quality.
Moneyzine EditorJanuary 15th, 2024
The term bull market refers to a period of time during which there is an increase in the value of equities traded on a stock market. There is no widely accepted definition of a bull market in terms of duration or magnitude of the increase.Moneyzine EditorJanuary 9th, 2024
The term market correction refers to the downward movement of a financial market or individual security. A market correction is classified as a secondary trend, since they are usually short in duration.Moneyzine EditorJanuary 24th, 2024
The term market trend is used to describe the upward or downward movement of a financial market over time. Market trends fall into one of three classifications: secular, primary, and secondary.Moneyzine EditorSeptember 20th, 2023
The term market sentiment is used to describe the prevailing attitude of investors towards a financial market or individual security. Market sentiment develops over time, and is based on a large body of information including both fundamental and technical factors.Moneyzine EditorFebruary 8th, 2024
