A bear market is a sustained decline in prices, conventionally marked at 20% or more below a recent high. It is named for the downward swipe of a bear’s paw. Bear markets tend to be shorter than bull markets but far sharper, and they are where most permanent losses are made by investors who are forced to sell.
Key takeaways
- A 20% fall requires a 25% gain to get back to even.
- Falling prices are only a permanent loss for those who have to sell into them.
- Bear markets reprice expectations, not just prices.
