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Investment Dictionary


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Bear Market

 

A bear market is a market trend when investment market is decreasing over longer period and is believed to decrease in the future. Bear market is a well known term in the investment world and is opposite to bull market.

 

How to identify the bear market:

There is no exact definition for how long down trend has to continue to be assigned to bear market, but it is more about psychology and feeling than the analysis of charts. Sometimes decline may continue for a half of year, but if decrease will not be very significant and investors are to expect a stock market jump in the near future it is not a bear market yet. Other believe that bear market starts when stock indices loose more than 20% from the peak.

 

How to profit:

During bear market most of the investors are thinking how to protect their investments but not how to profit from it. Of course some decisions may bring good return in bear market. For example, investor may have a short position (short selling) or some put options. But such investment decisions are very risky and not everyone tries such speculation

 

The bonds of highest safety also increases in value when stock market crashes occur, but those fluctuations aren’t very significant compared to stock market movements.

 






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