Bear Market

A bear market is defined as a period in which the prices of Securities fall by 20% or more from their recent highs, typically over a span of at least two months. This term is most commonly used to refer to declines in Stock markets, but it can also apply to other Asset Classes such as Bonds, currencies, and Commodities. Bear markets are often characterized by widespread pessimism and negative investor sentiment, leading to a self-sustaining downward spiral in Asset prices.

Examples of bear markets include:

• The 2007-2009 bear market, triggered by the subprime mortgage crisis, saw the S&P 500 Index fall by approximately 57% from its peak.

• The dot-com bubble burst in 2000 led to a bear market that lasted until 2002, during which the Nasdaq Composite lost about 78% of its value.

Bear markets can also occur in more localized markets or sectors. For instance, a bear market in oil prices was seen from mid-2014 to early 2016, where crude oil prices dropped from over $100 per barrel to around $30.