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Bear Market

Moneyzine Editor
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Moneyzine Editor
1 mins
November 6th, 2024
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Bear Market

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

  • Dead Cat Bounce
    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.
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    Moneyzine Editor
    November 6th, 2024
  • Bull Market
    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 Editor
    Moneyzine Editor
    November 6th, 2024
  • Market Correction
    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 Editor
    Moneyzine Editor
    November 6th, 2024
  • Market Trend
    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.
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    Moneyzine Editor
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  • Market Sentiment (Investor Sentiment)
    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 Editor
    Moneyzine Editor
    November 6th, 2024

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