A bear market is a prolonged decline in market prices. This is a situation in which securities prices drop 20% or more from their recent highs, amid widespread pessimism. Bear markets are usually associated with declines of an index or overall market like the S&P 500. However, individual securities and commodities can be considered to be in bear markets if they experience a decrease of 20% or more over a sustained time period (typically two months or longer). General economic downturns, such as a recession, can also lead to bear markets. Contrast bear markets with the bull market that is in an upward trend
Phases Of a Bear Market
Bear markets typically have four phases.
- High prices and high investor sentiment are the hallmarks of the first phase. Investors begin to withdraw from the markets towards the end of this phase and start to take in profits.
- The second phase is when stock prices start to plummet, corporate profits and