What Is Bear Market?
A period of declining stock prices, typically defined as a 20%+ drop from recent highs.
The Full Definition
A bear market is a sustained decline of 20% or more from recent market highs, typically lasting at least two months. Bear markets are often accompanied by economic weakness, rising unemployment, and negative investor sentiment. Historically, US bear markets have lasted an average of about 9–10 months and seen average declines of around 36%. While painful in the moment, every bear market in history has eventually been followed by a recovery to new highs.
Real-World Example
The 2008–2009 bear market saw the S&P 500 fall 57% from its 2007 peak. Investors who stayed invested and continued contributing recovered fully within 4 years and went on to significant new highs. Those who sold at the bottom locked in their losses permanently.