What Is A Bear Market ?
Bear market is a market in which the prices of the financial securities fall and it causes a negative effect. The investor involved in this market suffers from lack of confidence owing to such sudden fall in prices. This market condition is prevalent when the economy is in recession and there is high unemployment rate. It occurs when the inflation is on the rise. It however does not mean that whenever there is a fall in stock prices, bear market arises. If the dipping period is short and there is an immediate rise in the stock prices, bear market no longer prevails. |
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This market condition is generally the outcome of a sudden fall of 20 percent or more than that in the stock prices. One of the primary reasons that may account for such fall in stock prices is the plummeting amount of corporate profits. Due to such unfavorable decline in the stock prices, investors get apprehensive about their investments as large sums of money is exposed to great risk and uncertainty. They might lose their invested money which can completely wreck their financial stability.
Such market fluctuations diminish the value of money which may remain low for a longer time period. Bear Market provides the investors a favorable opportunity to enter into the stock market. Considering the past experiences, bear market condition was quite common in the US which includes Great Depression in the 1930s. Afterwards, the economy bounced back and again entered the market in 1973 to 1982 which was characterized by the stagflation and so on. So, it is advisable to consult an experienced financial advisor prior to investing under bear market conditions. This in turn would enable one to ensure increased safety of investments thereby giving an opportunity to earn great returns.
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What Is A Bear Market ?
