A market condition where prices fall 20% or more from recent highs.
A bear market is a prolonged period during which securities prices decline 20% or more from recent highs, accompanied by pessimism and declining investor confidence. In bear markets, stocks fall for extended periods, often lasting months or even years. The opposite of a bull market, a bear market creates opportunities for patient investors to buy at lower prices, but it can be psychologically difficult to hold investments during downturns. Historical bear markets have been triggered by recessions, geopolitical events, financial crises, and shifts in monetary policy. Investors typically protect against bear markets through diversification, maintaining an emergency fund, and focusing on long-term rather than short-term returns.