Bear market, also known as a “bear market,” is a term used in the context of financial markets to describe a period when asset prices undergo prolonged declines. During a bear market, there is pessimism among investors, leading to continued price declines, and the market atmosphere is generally unfavorable.
Characteristics of a bear market include:
Long-term price declines: A bear market is characterized by a prolonged period during which asset prices continuously decline. This tends to distinguish it from short-term price corrections, which can occur even during a bull market.
Investor pessimism: Investors in a bear market usually feel pessimistic about future market developments. They may react to economic, political or other news that deepens their belief in uncertainty and risk.
Magnitude of price declines: Although there is no strict boundary to determine when the market turns bearish, the criterion of a drop of at least 20% from the highest level is often used. Investors and analysts watch these declines to determine whether the market is currently ruled by a bear.
Low trading activity: A bear market is often characterized by low trading activity as investors begin to avoid risk and reduce their exposure to the market.
Increased interest in safe assets: During a bear market, investors often seek safe havens such as government bonds and gold, avoiding riskier investments.
Going through a bear market can be difficult for investors, as it requires adjusting investment strategy to changing market conditions. However, for some investors, it opens up opportunities to buy assets at lower prices, which can pay dividends in the long run.
