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What is a ‘Bear Market’?

A bear market is a market in which the general trend is down. If a market is contracting it can be said to have become a bear market, having previousl...

14 April 2021

Martin Cozens

A bear market is a market in which the general trend is down. If a market is contracting it can be said to have become a bear market, having previously been a bull market. A bear market is seen as a correction to a bull market, bringing prices back to a rational valuation after a protracted period of growth. A bear market can have widespread consequences as value is lost across many different assets, potentially effecting the broader economy, productivity and GDP. A bear market can become a market crash if it precipitates a sudden fall in shares and a mass sell-off of assets. The financial crashes of 1929 and 2008 could be seen as bear markets.

During a bear market some assets might go up, experiencing a bull-run. Gold is seen as a safe-haven during such times and as demand increases it will often rise in value while other assets are contracting.

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