Bears and Bear Markets

What is a bear? What is a bear market?

A bear is one who expects a decline in prices. The opposite of a bull. A news item is considered bearish if it is expected to result in lower prices.

A bear market is one in which prices generally are declining over a period of months or years. Opposite of Bull Market.

A bear market tends to be accompanied by widespread pessimism. Investors anticipating further losses are motivated to sell, with negative sentiment feeding on itself in a vicious circle. The most famous bear market in history was the Great Depression of the 1930s.

Prices fluctuate constantly on the open market; a bear market is not a simple decline, but a substantial drop in the prices of a range of issues over a defined period of time. By one common definition, a bear market is marked by a price decline of 20% or more in a key stock market index from a recent peak over at least a two-month period. However, no consensual definition of a bear market exists to clearly differentiate a primary market trend from a secondary market trend.

What is a bear market rally?

A temporary rise in prices during a bear market.

A bear market rally is sometimes defined as a rise of at least 10%, but no more than 20%.

Notable bear market rallies occurred in the Dow Jones index after the 1929 stock market crash leading up to the market bottom in 1932, as well as throughout the late 1960s and early 1970s. The Japanese Nikkei stock average has been typified by a number of bear market rallies since the late 1980s while experiencing an overall downward trend. (Source: Wikipedia)

See also:
Bulls & Bull Markets