Definition of Bear Market



A bear market is a market when prices of securities are in a declining trend for a period of two months or more. The bear market shows a price decline of 20% from the high value of a security. Share prices reflect the future growth prospects and perception of market participants, but when people think that the future growth is not certain and prices begin to decline, there is a natural mechanism of selling the shares to avoid the downside losses from further decline in prices.

 


This trend shows a bearish market. When investors are not risk-takers and are more risk-averse, they avoid investing in buying stocks that are bearish, that can last for over years

 

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