Bear Market

Definition: A long period where the stock market value falls along with a sense of pessimism for the public. If the length of the declining stock prices isg stock prices is short and quickly turns into a period of rising stock prices, it is then called a correction. Bear markets are usually seen when the economy is in a recession and there is high unemployment or when there is rising inflation. The Great Depression of the 1930s is the most famous bear market in US history. Bull markets are the opposite and represent a strong rise in stock prices over a long period.

Example: The best recent example of a bear market was the one we saw between the end of October 2007 and March 2009. The market declined of 20% by mid-2008 was also seen in other stock markets across the globe. On September 29, 2008, the DJIA had a record breaking drop of 777.68. The DJIA reached a market low of 6,443.27 on March 6, 2009. This was a decline of over 54% since the October 9, 2007 high. A bull market then started on March 9, 2009, as the DJIA regained more than 20% from its low to 7924.56 with three weeks of gains. By the end of the year it had gained over 60%.