Glossary
Bear Market
A bear market occurs when the price of a broad market index or asset class falls 20% or more from recent highs, often due to investor pessimism, economic downturns, or rising uncertainty. It reflects a sustained period of declining prices and negative market sentiment.
What causes a bear market?
Bear markets are usually triggered by economic slowdowns, rising interest rates, geopolitical instability, or declining investor confidence.
How long do bear markets last?
On average, bear markets last about 9 to 18 months, but durations can vary widely depending on the underlying causes and market responses.
What’s the difference between a bear market and a correction?
A correction is a short-term drop of 10% or more, while a bear market involves a deeper decline of 20% or more and tends to last longer.
Is it a good idea to invest during a bear market?
While risky, bear markets can present buying opportunities for long-term investors. Many successful investors use market downturns to purchase quality assets at lower prices.
How can I protect my investments in a bear market?
Diversification, holding defensive stocks or bonds, and maintaining a long-term perspective can help reduce the impact of a bear market.
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