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A bear market is a market in which prices decline against a background of widespread pessimism (the opposite of bull market). A bear market is generally shorter in duration than a bull market. A bear market signifies a prolonged decline in stock prices that may occur for months or even years. A bear market in bonds is often fueled by fears of rising inflation/interest rates while a bear market in stocks is usually caused by investors who expect declining economic activity and falling profits. A general rule of thumb on Wall Street for what constitutes a bear market in the stock market is a decline of 20% or more. However, the largest bear market (1929-1932) resulted in the Dow declining 89%. |
