bear market meaning

Bear Market Meaning With Example

Bear Market Meaning – A condition in the stock market when prices are falling and there is a pessimism that they will keep falling in the upcoming time.

It is a period which consist of several months in which more than half percent of the stocks are falling. The term is though used specifically for stock market. However people also use the term for defining the fall in the prices of the stock or securities. In addition to this, the term is also used to describe the fall in a specific sector, bonds and real estate, etc.

Bear market is the opposite of bull market where investor have a optimism that prices of the securities will increase. Bear market is pessimistic and  runs on the fact that the securities prices will fall in the future. According to most of the analysts, if the market price false 20 to 25 percent from their 52 week high, the market is said to be as bear market. This type of situation is characterized with selling of securities whereas in case of bear market, there is buying of securities takes place.

Bear Market Vs. Bull Market

Bear market implies the falling of the prices whereas bull market is featured with increase in the stock prices. Bear market marks the selling of shares in large number and bullish trend involves buying of shares in large volumes. The most important to note here is that these two markets do not lasts for longer. At some time there will be bullish trend and another time it will bearish trend.

It is very important from the investor point of view that prepare for this trend. Though the bearish trend does not lasts for longer but they do not give investors any advance notice that they won’t come. So in case of bearish trend, investors should always try to either exit the market early or at the right time. Otherwise it could costs money to the investor.

Related Financial Terms of Bear Market