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Bear market

A fall of 20% or more from a recent high, usually with widespread pessimism.

Market BasicsBeginner

Definition

A bear market is a sustained decline. The 20% line is a convention, not a law. Bear markets differ in length: the 2020 decline lasted about a month, while the bear market that began in 2000 lasted more than two years.

How it is used

Investors use the label to describe the regime they are in and to adjust risk, not to time an exact bottom.

Watch out for

Sharp rallies of 10% or more are common inside bear markets, so a bounce does not by itself mean the decline is over.

Example

Historical exampleFrom its January 2022 high to its October 2022 low, the S&P 500 fell about 25%.

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