Bear Market
Bear Markets occur when market prices drop over 20% from a recent peak.
- Typically long in duration
- The definition applies to a market, index, or individual stock/security
- Bear markets typically are more volatile than bull markets
- price moves get more extreme on both up an down days
- intraday swings also get larger
- The sharpest and largest rallies tend to occur during bear markets
- Why? The markets are most volatile during bear markets. Sharper Selloffs & Rallies:
- Examples: 10 best days in DOW since 1950 were in 1987, 2002, 2008 and 2009
- Speculative stocks and those that went up the fastest before tend to do the worst during bear markets
- Speculative sectors often lead the bear market while blue chips lag