Bear Market

Definition

A broad decline in investment prices, commonly described as a fall of at least 20% in a major stock index from a recent high.

The decline is measured from a recent peak, so it can build over time. Short rallies can occur during a bear market as investors reassess the outlook. A major index may fall enough to meet the common threshold while some individual stocks rise.

Example

A broad stock index falls from a recent high of 1,000 to 800. That 20% drop meets a common benchmark for a bear market.