What is a bear market?

I get asked periodically “just what is a bear market?” People mean “technically speaking” I suppose.

A bear market is defined (by me and most of those in the financial services industry) as a drop in any major stock index of 20% or more. This drop could even be from a bond index for that matter (but the drop would likely be much less).

 

Bear market history

We’ve had several bear markets throughout history. I think what stands out the most to me is looking at bear markets and bull markets in relationship to each other.

Just how pronounced are they? How long do they last? How far do they drop or rise relative to each other?

 

Bear markets are short term, bull markets are long term

What is a bear market anyway? How much does the stock market need to drop?

 

Whiteboard Wealth

In Whiteboard Wealth #7 I explain what you’re looking at with the chart above. I also provide insight on the various bull and bear markets throughout history.

The stock market is an interesting animal. These bull market periods of long pronounced rises are punctuated by shorter, temporary declines.

Check out Whiteboard Wealth 7 here:

 

What Is A Bear Market & Why Do I Care?

A big drop in value, that’s what a bear market is. You can put your own spin or drop percentage on it, but most people would say 20% or so.

The moral of the story is you need to be an investor in both good and bad markets, bull and bear markets alike. The real moral of the story is if you’re a saver/accumulator of wealth/investor and NOT retired, you should be VERY excited to be an investor during the BEAR MARKETS, NOT during the bull markets.