A bear market is a sustained drop in prices and confidence — typically a fall of 20% or more. The name evokes a bear swiping its paws downward.
A bear market is generally defined as a decline of 20% or more from a recent high, sustained over time. A smaller drop of 10%–20% is usually called a correction. The mirror image — a 20%+ rise — is a bull market.
Bears tend to arrive when the economy weakens — slowing growth, rising unemployment, high interest rates, or a shock like a recession or crisis. As prices fall, fear feeds on itself: investors sell to avoid further losses, which pushes prices lower still. A sudden, steep version of this is a crash.
| Term | Roughly |
|---|---|
| Pullback | A minor dip of about 5%. |
| Correction | A decline of 10%–20%. |
| Bear market | A sustained drop of 20% or more. |
| Crash | A very fast, severe fall over days. |
Long-term investors often weather bears by staying diversified, avoiding panic-selling at the bottom, and remembering that historically every bear market has eventually given way to a new bull. Some advanced traders even try to profit from falling prices by short selling — though that carries outsized risk.
Practice a downturn safely: bet on falling prices with play money in the short selling game, where the loss is capped for learning.
Not advice: educational content with simulated examples only. For real guidance see investor.gov.
See the optimistic flip side in what is a bull market, and learn why spreading risk matters in how to diversify a portfolio.
A bear market is a sustained fall in stock prices, usually defined as a drop of 20% or more from a recent high, accompanied by widespread pessimism.
A correction is a decline of roughly 10% to 20%, while a bear market is a deeper, more sustained fall of 20% or more.
Bear markets are typically triggered by a weakening economy — slowing growth, rising unemployment, high interest rates, or a major shock — which drives fear-based selling.
Some traders use strategies like short selling to profit from falling prices, but it carries large risk. Long-term investors more often focus on staying diversified and avoiding panic-selling.