A bear market occurs when stock prices fall 20% or more from recent highs, typically accompanied by negative investor sentiment and declining economic indicators. This financial term derives from the way bears attack - swiping their paws downward.

Bear vs Bull Markets While bear markets represent declining prices and pessimistic sentiment, bull markets indicate rising prices and optimistic outlooks. These opposing terms help investors describe overall market conditions and trends.

Characteristics of Bear Markets

• Stock prices decline 20%+ from recent peaks
• Negative investor sentiment
• Decreased trading activity
• Higher market volatility
• Economic indicators trending downward

Common Causes

• Economic recessions
• Pandemic events
• Financial crises
• Political uncertainty
• Monetary policy changes

Duration and Recovery Bear markets typically last 289 days on average, though duration varies significantly. The COVID-19 bear market of 2020 lasted only 33 days, while others have persisted for years.

Latest Bear Market: COVID-19 (2020)

• Duration: February 2020 - March 2020
• Trigger: Global COVID-19 pandemic
• Impact: S&P 500 fell 34% from peak
• Recovery: Markets reached new highs by August 2020, aided by government stimulus

Crypto Bear Markets Cryptocurrency markets experience more frequent and volatile bear markets compared to traditional markets, with Bitcoin often leading market sentiment. The crypto winter of 2022 saw major cryptocurrencies lose over 70% of their value.

Contrarian Investing Opportunities Successful contrarian investors often use bear markets to acquire quality assets at discounted prices. Notable examples include:

• 2008/2009 Financial Crisis: Investors who bought during the crash saw substantial gains in subsequent years
• 2020 Pandemic: Those who invested during March 2020 benefited from the swift market recovery

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