What is Bear Market?
A prolonged market decline of 20% or more from recent highs.
Formal Definition
A bear market is conventionally defined as a decline of at least 20% from a recent peak in a major index, sustained over weeks or months and often accompanied by weak economic conditions and negative sentiment. Bear markets contrast with shorter, shallower corrections and typically end with capitulation before a new bull market begins.
In Simple Terms
It is an extended slump where stock prices fall a lot, usually a fifth or more, and pessimism takes over. It is the tough stretch investors must endure, and it eventually gives way to recovery.
Example
During the 2022 bear market, the S&P 500 fell more than 20% from its January peak to its October low.