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

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One other tactic to consider to ease worries about withdrawing money during a bear market is to set aside 15 to 18 months of cash to cover expected portfolio withdrawals during the length of a typical recession, Branton says. Robert Powell, USA TODAY, "5 steps to ease your worries about money, health in retirement," 16 May 2018 China bore the brunt, with the selloff erasing $746 billion as the Shanghai Composite Index came close to entering a bear market. Cecile Vannucci,, "Asia Stocks Bear the Brunt of a Brutal $2.1 Trillion Selloff," 22 June 2018 In the long term, though, experts say a sharp correction into bear market territory (the Dow was about halfway there as of the end of the week) could have ripple effects on the broader economy. Martha C. White, NBC News, "Will a falling stock market take the job market along with it on the way down?," 9 Feb. 2018 This suggests that both groups could easily fall by more or less the same amount in the next bear market. Mark Hulbert, WSJ, "‘Value’ Stocks May Not Be the Bear-Market Cure, After All," 8 July 2018 And hedge funds that wager on things like bonds, currencies and the likelihood of corporate mergers boast that their performances are unconnected to the stock markets and can rise in bull and bear markets alike. James B. Stewart, New York Times, "Hedge Funds Should Be Thriving Right Now. They Aren’t.," 12 July 2018 Shanghai’s index entered bear market territory, having dropped over 20 percent from a recent high in January. Annabelle Liang, The Seattle Times, "Global stocks mixed, Chinese market enters bear market," 26 June 2018 Yet during the long-term bear market in stocks between 1968 and 1982, the capitalization of the U.S. stock market grew by 2.1% per year while the median household income increased by 6.3%, or triple that rate. Tom Saler, Milwaukee Journal Sentinel, "Tom Saler: The connection between corporate profits, public incomes is imprecise, at best," 12 Jan. 2018 Futures prices for the red metal have tumbled 17% from a four-year high in June, bringing it close to a bear market. David Hodari, WSJ, "Metals Slide Deepens as Trade Fears Escalate," 11 July 2018

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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Last Updated

7 Oct 2018

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The first known use of bear market was in 1858

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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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