What does "bear market" mean?

A bear market is generally considered to be when stocks decline at least 20% from a recent high. US stocks have dipped into bear territory about every 6 years on average over the past 150 years. When markets drop, it's a good time to check in on your emergency savings and investment plan.

Is it good to buy during a bear market?

For a long term investor, bear market is generally a good time to secure new assets and average down on long term holdings you're confident about. Unless you're planning to retire or need to access the money soon for some reason, stressing about market fluctuations on a daily basis will drive you crazy.

What does a bear market indicate?

A “bear” is an investor who expects prices to decline and positions their portfolio accordingly. The term may derive from the proverb about “selling the bearskin before one has caught the bear” or perhaps from selling when one is “bare” of stock.

How long does a bear market last?

Bear markets (a 20% or more drawdown) typically last nine to 15 months. Downturns triggered by geopolitical or natural events often recover quicker than those caused by underlying fundamentals.

What happens during a bear market?

“A bear market is when major U.S. stock indices, like the S&P 500, drop by 20% or more from their peak,” explains Marci McGregor, head of Portfolio Strategy for the Chief Investment Office (CIO), Merrill and Bank of America Private Bank.

Bull and Bear Markets (Bullish vs. Bearish) Explained in One Minute: From Definition to Examples

Who benefits from a bear market?

Long-term investors can find many valuable stocks at lower prices during a bear market, making bear markets a good time to buy if you can afford to wait to see your investments rebound. Traders looking to make a short-term profit may need to use other strategies during a bear market, such as short selling.

Do stocks go down in a bear market?

Stocks lose 35% on average in a bear market.

By contrast, stocks gain 112% on average during a bull market.

How likely is a bear market in 2025?

Arnott notes that in most decade-long economic cycles, bear markets hit every five to seven years. “So there's about a 20% chance you'll get a sharp downturn in any one year,” he says. “But now, I'd put the chances much higher for both 2025 and 2026, at about 50% each.

Should I pull my money out of the stock market before it crashes?

Staying invested is generally more profitable than trying to outsmart the market. That's because while markets can be unpredictable in the short term, they historically have trended upward over time. In fact, some of the market's biggest gains occurred after sharp declines.

How to tell if you're in a bear market?

A bear market is when a stock market index falls by at least 20% from recent highs. (Reminder: A stock market index is a group of stocks investors watch to gauge how the market is doing.

How do bears make profit?

Bears are pessimistic about the market and think that it will go down. A bear can profit from being right about this by selling stocks or ETFs short in the market. This involves borrowing shares and then selling them, hoping to buy them back lower and return the shares to the lender.

What is better, the bull or bear market?

Although some investors can be “bearish,” the majority of investors are typically “bullish.” The stock market, as a whole, has tended to post positive returns over long time horizons. A bear market can be more dangerous to invest in, as many equities lose value and prices become volatile.

What is the longest bear market in history?

The longest bear market lingered for three years, from 1946 to 1949. Taking the past 12 bear markets into consideration, the average length of a bear market is about 14 months.

What to avoid in a bear market?

Remember that bear markets are painful but temporary. Sticking to your plan is key, so resist the urge to change the risk profile of your portfolio or make sizable shifts out of stocks or into cash.

Should I buy gold in a bear market?

What typically happens to gold during a bear market? During bear markets, gold often experiences initial selling pressure as investors liquidate assets for cash. However, gold typically recovers faster than other assets and can outperform as economic concerns intensify.

How much did the stock market crash in 2008?

The US bear market of 2007–2009 was a bear market that lasted from October 9, 2007 to March 9, 2009, encompassing the 2008 financial crisis. The S&P 500 lost approximately 50% of its value, but the duration of the bear market was just below average.

What is the stock market prediction for 2025?

August 2025 Stock Market Outlook Key Takeaways

Valuations increased faster than the market return but are concentrated in only five stocks. Growth stocks remain at an especially high premium. Small-cap stocks remain very attractively valued but may take a while before they start to work.

What is a 10% drop in the stock market called?

Correction: A correction is when stocks, bonds, commodities or indices reverse course by at least 10 percent before resuming their previous upward or downward trend. Though a correction can technically describe either a 10 percent increase or decrease, usually it's used in reference to a drop in prices.

What to buy during a market crash?

How to survive a stock market crash?

Rebalance your portfolio

Rebalancing your portfolio can help you navigate market downturns. Rebalancing means adjusting your investments to maintain your desired asset allocation. If stocks have fallen sharply, your portfolio might be more weighted toward relatively stable assets like bonds or cash.

What to buy before a bear market?

Government bonds and defensive stocks historically perform better during a bear market. However, most people investing for the long term shouldn't be aggressively tweaking portfolios every time there is a sell-off. The best way to go is to build a well-diversified portfolio and stick by it.

How to tell if a stock is bullish?

Simple moving average (SMA)

The slope of the line determines the trend of the stock or index. An upward-sloping SMA is a bullish trend, and a downward-sloping SMA is a bearish trend. For trading, one must see if the price closes above the SMA after it has seen a reasonable downtrend in case of bullish bias.

How do people make money in a bear market?

Some markets, such as bonds, defensive stocks and certain commodities like gold often perform well in bearish downturns. If you have the risk appetite for it, bear markets may also be an opportunity to short-sell if trading, making a profit if you predict correctly when prices will fall (and make a loss if you don't)