What Is a Bear Market?
A bear market is when stock prices fall 20% or more from their recent high and stay low for a while. It is the opposite of a bull market.
Bear market vs correction
A drop of 10% to 20% is usually called a correction. A drop of 20% or more is a bear market. Corrections happen often. Bear markets are rarer and usually come with bad economic news.
How long does a bear market last?
It varies a lot. In the US, many bear markets have lasted around a year, but some ended in weeks and others dragged on for years. Bull markets have usually lasted much longer than bear markets.
Is a bear market good or bad?
It hurts while it lasts. But for people still adding money, it means buying at lower prices. Investors who keep putting in money on a schedule, called dollar-cost averaging, buy more shares when prices are low.
What to do in a bear market
- Avoid panic selling. Selling after a big fall locks in the loss.
- Check your diversification. Spread-out portfolios usually fall less.
- Look at companies with low debt and steady cash. They survive hard times better.
Related terms
Bull marketA long period of rising prices.
VolatilityHow much and how fast a price moves.
DiversificationNot putting all your money in one place.
Dollar-cost averagingInvesting the same amount on a regular schedule.
S&P 500500 large US companies in one index.
DebtMoney a company has borrowed and must pay back.