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Bear Market

What is a bear market?

A bear market describes an environment of falling security prices.

Generally, bear markets are characterized by investor pessimism, or the belief that a downward trend in prices will persist. As investors sell, they in turn drive down security prices.

A common definition of a bear market is a decrease in stock prices of at least 20% from recent highs, usually measured by the S&P 500 in the United States. However, a bear market can refer to falling prices of securities other than stocks.

While the two may go together, a bear market is not the same as an economic recession. A bear market describes a persistent decrease in security prices, while a recession refers to a period of decline in a country’s economic output.