What is the best way to define a Bear Market?

The term Bear Market labels a situation where the securities price plunges at least 20% continuously for a relatively short period (quarter commonly) in an entire market, index, industry or company. There are endless reasons for this phenomenon. However, it reflects investors’ lack of trust, who see risk and negative prospects in their securities. For instance, the lack of investors’ trust in the global banking industry during Q2 of 2023.

When entering a bear market, investors start selling their stocks and relatively quickly ‘setting the bear’s tail on fire’―entering into the fire-sale stage. Thus, sold stocks’ quantity increases sharply. Some investors might opt for short-selling or put options in a bid to earn from the situation as prices plummet. Others will try to minimise their loss by selling their stock. The term could be used for all sorts of tradables, such as stocks, currencies, bonds and real estate. For more information, visit Jon Ane, The Rosetta Stone of Strategy.

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