Bear Market
A sustained period of falling prices, conventionally marked by a decline of 20% or more from a high.
Formula
Test: the index has fallen 20% or more from its prior peak
Unit
%
In depth
Bear markets are shorter and sharper than bull markets, and the arithmetic of recovery is unforgiving — a 20% fall needs 25% to recover and a 50% fall needs 100%. They are typically accompanied by rising correlations, so diversification within equities helps less than usual precisely when it is needed. Sharp counter-trend rallies are characteristic and are often mistaken for the bottom, which is why the phase is difficult to navigate even for those who anticipated it. Identifying one is retrospective and carries no information about how much further prices might fall.
Worked example
An index falling from 24,000 to 19,200 is down exactly 20%. Returning to 24,000 requires a 25% rise from there, and a further fall to 16,000 would require 50% to recover.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Bear Market” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.