bear market


Definition of bear market

: a market in which securities or commodities are persistently declining in value — compare bull market

Examples of bear market in a Sentence

Recent Examples on the Web Frederick pointed out that many active funds performed better than passive ETFs in December 2018, when the broader market plunged to near bear market status due to worries about the Federal Reserve raising rates too aggressively. Paul R. La Monica, CNN, "Is there any reason to own an individual stock anymore?," 24 Jan. 2020 And the good news for those investors is that there will always be a bear market somewhere, even when the broad market is killing it. Ben Carlson, Fortune, "Why You Actually May Want to Buy ‘Bears’ in a Bull Market," 26 Dec. 2019 By the close on Christmas Eve, the S&P 500 Index had fallen slightly more than 20% from its recent peak, taken by many as the definition of a bear market. John Authers | Bloomberg, Washington Post, "The Fed and Markets Enter Into an Uneasy Peace," 4 Nov. 2019 When stocks fall in that period, the decline tends to signal a bear market or a sizable decline is coming, according to The Stock Trader’s Almanac. Jessica Menton, USA TODAY, "Santa is ready to deliver a late gift to investors with a stock market rally that bodes well for 2020," 6 Jan. 2020 Heading into 2019, investors were licking their wounds from last December's mini-bear market, a 20% drawdown in the S&P 500 that bottomed out on Christmas Eve. Ben Carlson, Fortune, "10 Things Investors Can Bank on in the New Year," 27 Dec. 2019 From 1938-1972, the average bear market for the S&P 500 saw stocks fall -27.4%. Ben Carlson, Fortune, "Yes, The Market Will Eventually Crash. Here’s How to Be Ready For the Next One," 6 Sep. 2019 The economy was in a recession, stocks in a bear market and inflation was high and the oil crisis was raging. Anneken Tappe, CNN, "This is how Nixon and Clinton's impeachment inquiries affected markets," 29 Sep. 2019 Oil prices traded in a bear market earlier in the session, defined as a 20% pullback from recent highs. Stephanie Yang, WSJ, "Oil Closes Higher After Dipping Into Bear-Market Territory," 4 June 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'bear market.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of bear market

1858, in the meaning defined above

History and Etymology for bear market

bear entry 1 (one that sells in expectation of a price decline)

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Time Traveler for bear market

Time Traveler

The first known use of bear market was in 1858

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Statistics for bear market

Last Updated

28 Jan 2020

Cite this Entry

“Bear market.” Dictionary, Merriam-Webster, Accessed 22 Feb. 2020.

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More Definitions for bear market

bear market


Financial Definition of bear market

What It Is

A bear market is a period of several months or years during which securities prices consistently fall. The term is typically used in reference to the stock market, but it can also describe specific sectors such as real estate, bond or foreign exchange. It is the opposite of a bull market, in which asset prices consistently rise.

How It Works

Identifying and measuring bear markets is both art and science. One common measure says that a bear market exists when at least 80% of all stock prices fall over an extended period. Another measure says that a bear market exists if certain market indexes -- such as the Dow Jones Industrial Average and the S&P 500 -- fall at least -15%. Of course, different market sectors may experience bear markets at different times. The bear market that occurred in the U.S. equity markets from 1929 to 1933 is one of the most famous bear markets in history.

The causes and characteristics of bear markets vary, but most financial theorists agree that economic cycles and investor sentiment both play a role in the creation and momentum of bear markets. In general, a weak or weakening economy -- indicated by low employment, low disposable income, and declining business profits -- ushers in a bear market. The existence of several new trading lows for well-known companies might also indicate that a bear market is occurring. It is important to note that government involvement affects bear markets. Changes in the federal funds rate or in various tax rates can encourage economic expansion or contraction, ultimately leading to bull or bear markets.

Falling investor confidence is perhaps more powerful than any economic indicator, and it also often signals a bear market. When investors believe something is going to happen (a bear market, for example), they tend to take action (selling shares in order to avoid losses from expected price decreases), and these actions can ultimately turn expectations into reality. Although it is a difficult measure to quantify, investor sentiment shows through in mathematical measurements such as the put/call ratio, the advance/decline line, IPO activity and the amount of outstanding margin debt.

Regardless of their exact beginnings and ends, bear markets typically have four phases. In the first phase, prices and investor sentiment are high, but investors are beginning to take profits and exit the market. In the second phase, stock prices begin to fall quickly, trading activity and corporate earnings fall, and positive economic indicators are below average. Investor sentiment also gets more pessimistic and some investors panic. Market indices and many securities reach new trading lows, trading activity continues to decrease, and dividend yields reach historic highs. In the third phase, prices and trading volume increase somewhat as speculators enter the market. In the fourth and final phase, stock prices continue to fall, but they do so at a slower pace. As investors find prices low enough and as they react to good news or positive indicators, bear markets often eventually give way to bull markets.

Why It Matters

Bear markets cost investors money because security prices generally fall across the board. But bear markets don't last forever, and they don't always give advance notice of their arrival. The investor must know when to buy and when to sell to maximize his or her profits. As a result, many investors attempt to "time the market," or gauge when a bear market has begun and when it is likely to end.

Analysts spend thousands of hours trying to mathematically determine what will trigger the next bear market and how long it will last, and technical analysis is especially prevalent in this effort.

For details on the history of the words that describe market trends, read The Quirky And Brutal Origins Of The Terms 'Bear' And 'Bull.'

Source: Investing Answers

bear market


English Language Learners Definition of bear market

finance : a market (such as a stock market) in which prices are going down

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Nglish: Translation of bear market for Spanish Speakers Encyclopedia article about bear market

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