What is the bear market?
When the financial markets experience a widespread and significant decline, the predominant economic conditions are referred to as the "bear market". The bear market is the opposite of the bull market, the market that is growing rapidly. When markets become bear, the results for investors and the general public may be nervous. If the bear market persists, it is possible to enter economic depression. On the other hand, the bull markets tend to create extensive optimism and profits, with investors hoping that the market will not be as a bubble.
People distinguish bear markets with different indicators. In general, the real bear market is accompanied by serious pessimism among investors. Investors change conservative, accumulate their portfolios and make cautious investments. This reduces the market even more, which eventually leads to a market drop by up to 20%. The bear market also affects multiple markets; For example, in the United States, both NASDAQ and S&P indices will begin to fall. A decrease in only one market is not a bear market, although it could mark the beginning of one.
During the bear market, people tend to sell their shares in the hope of making a profit while they can. This can cause depression, with a general panic to produce mass sales. Some investors are also involved in short sales, a potentially risky investment process in which they sell borrowed shares in the hope that they will buy them later at a significantly reduced price, which maintains the difference in price. This may be dangerous if the market is not possible, as expected.
It is important to distinguish the bear market from repair. Repair occurs when inflated stock prices fall to a more natural level. It is a short -term decline in stock and safety values, and although it can be difficult to go, it is not characterized by mass pessimism and frustration with a decrease in the market. During correction, the ingenious investors can buy good stocks at lower prices, which potentially turns on a profit when the market emerges from correction.
SeveralThe thing can cause the bear market. Usually, market decline will be accompanied by a general recession characterized by high unemployment and increasing inflation. In addition, key indices such as housing values will tend to decline rapidly. In the United States, he was one of the most famous markets with the bear at the age of 30 during the great depression. In the middle of the 70s, another bear market appeared, which is the result of the stagflation economy.