Bear Market
Definition
A prolonged period where stock prices fall 20% or more from recent highs. Bear markets are driven by economic downturns, fear, and pessimism. They typically last 9-16 months on average. The opposite of a bull market.
Why It Matters
Bear markets are scary but normal — they happen every 3-5 years on average. Historically, every bear market has been followed by a recovery. Investors who stay invested and keep buying during bear markets often see the biggest long-term gains.
Example
The COVID crash of March 2020 was one of the fastest bear markets ever — the S&P 500 dropped 34% in 23 days. But within 5 months it fully recovered. Those who panic-sold locked in losses; those who held (or bought more) came out ahead.