Glossary
Bear Market
A fall of 20 percent or more from a recent high, across a whole market rather than a single stock.
The 20 percent line is a convention, not a law of nature. Someone decided a long time ago that a drop of that size deserved its own name, and the name stuck because it is useful shorthand for reporters and for anyone trying to describe a period rather than a day.
The word comes from the way a bear attacks, swiping downward, against a bull that thrusts its horns up. That is the whole etymology, and it is worth knowing only because the two words appear constantly in market commentary and sound more technical than they are.
Bear markets have historically ended, and how long they have lasted has varied enormously. What nobody has ever been able to do reliably is say in advance when one has started or when one has finished, because both are only visible after the fact by measuring back to a peak or a trough that had to happen first.
Learn this properly
Lesson 5: Risk, in the Language You Already UseWhat you can actually lose, why volatility and loss are not the same word, and diversification without the lecture.
Related terms
- Bull MarketA sustained rise across a market, conventionally counted from a 20 percent gain off a recent low.
- VolumeHow many shares changed hands over a period, usually reported as the total traded during a single day.
- BetaA measure of how much a stock has moved relative to the market, where 1.0 means it moved roughly in step.
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