What it is
The commonly accepted definition of a bear market is that it’s when a securities market or index (usually stocks) falls 20% or more and stays at that level or drops further for a certain period of time.
There’s no time limit to how long a bear market can last. In some cases, this could be a year or even longer.
There are many factors that could lead to a bear market happening, including economic issues, geopolitical crises, bursting market bubbles, and severe pandemics. When one or more of these things occur, investors lose their confidence and take steps to avoid risk, triggering the bear market.
The name is supposedly taken from the way bears attack, which is by swiping downward.
What it means for you
When the market turns bearish, the value of your investments might fall. Remember that this is a paper loss, and it only becomes actualized if you pull your money out.
There’s a chance that the value will recover in time. Of course, this isn’t guaranteed, and so you should take a good look at the companies you have money in, to see if they are likely to withstand the challenge.
A bear market doesn’t mean that you need to stop investing. There are still many ways that you can use your money wisely to prepare for the better days that may come.
