Bear Market
20%+ sustained market decline from recent peak. Characterized by fear, pessimism, and falling prices. Buying opportunity for long-term investors.
What You Need to Know
Bear market is a sustained decline of 20%+ from recent market peaks. Marked by investor fear, economic uncertainty, and falling corporate profits. Opposite of bull market.
Historical bear markets:
- 2000-2002: -49% (dot-com crash)
- 2007-2009: -57% (financial crisis)
- 2020: -34% in 1 month (COVID crash)
- 2022: -25% (inflation/Fed tightening)
Average bear market lasts 9-15 months and declines 30-35%. Recoveries vary: sometimes V-shaped (rapid), sometimes multi-year.
What to do in bear markets:
- Don't panic sell (locks in losses)
- Continue dollar-cost averaging (buy low)
- Rebalance to buy stocks on sale
- Maintain 3-6 month emergency fund
- Remember: 100% of bear markets have been temporary
Bear markets are normal—they occur every 3-5 years on average. Every market peak eventually becomes a buying opportunity in hindsight. The pain is real, but selling turns paper losses into permanent losses.
Stay invested. Time in the market beats timing the market.
Sources & References
This information is sourced from authoritative government and academic institutions:
- investor.gov
https://www.investor.gov/introduction-investing/investing-basics/glossary/bear-market
Related Calculators & Tools
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Related Terms in Investment
12b-1 Fee
Hidden mutual fund fee (0.25-1% annually) for marketing and distribution. Comes out of your returns. Avoid funds with high 12b-1 fees.
AUM (Assets Under Management)
Total market value of investments managed by an advisor or fund. Used to calculate 1% annual advisor fees—$500K AUM = $5K/year.
Alpha
Excess return above benchmark. Positive alpha = beat the market. Most actively managed funds have negative alpha after fees.
Beta
Volatility compared to market. Beta of 1.0 = moves with market. Beta of 1.5 = 50% more volatile. Measures risk, not return.
Bull Market
20%+ sustained market rise from recent low. Characterized by optimism, economic growth, and rising prices. Opposite of bear market.
Dividend Yield
Annual dividend payment divided by stock price. 3% yield on $100 stock = $3 yearly dividend. Measure of income return.