|
A Bear Market is a phase in the life of a stock market or other financial market in which the value of most listed shares of stock fall consistently, or values in a financial market trend downward, as reflected by a downward movement of one or more key stock indexes or other financial market indices. Investors, anticipating further losses, are thus motivated to sell, and the pessimistic sentiment may feed on itself in a vicious circle.
Prices fluctuate constantly on the open market; a bear market is not a simple decline, but a substantial drop in the prices of a range of issues over a defined period of time. By one common definition, a bear market is marked by a price decline of 20% or more in a key stock market index from a recent peak over at least a two-month period. However, no single definition of a bear market exists. Indeed, a long bear market may include periods of temporary price increases, known as a bear market rally.
Declines in the index of below 15-20% are generally referred to as "corrections" or "adjustments" in the market. An exaggerated bear market characterized by panic selling is called a stock market crash. The opposite of a bear market is a "bull market."
Origins
The precise origin of the phrases "bull market" and "bear market" is obscure. The most common etymology points to London bearskin "jobbers" (brokers), who would sell bearskins before the bears had actually been caught in contradiction of the proverb ne vendez pas la peau de l'ours avant de l’avoir tué ("don't sell the bearskin before you've killed the bear")—an admonition against over-optimism. By the time of the South Sea Bubble of 1721, the bear was also associated with short selling; jobbers would sell bearskins they did not own in anticipation of falling prices, which would enable them to buy them later for an additional profit.
The origin of "bull market" is even more obscure, but may relate to the common use of these animals in bloodsport, i.e bear-baiting and bull-baiting.
See also
References
- Braze, David. "What Is a Bear Market? (http://www.fool.com/retirement/retireeport/2000/retireeport000717.htm)" The Motley Fool.
- Quinion, Michael "Bulls and Bears," World Wide Words, [1] (http://www.worldwidewords.org/qa/qa-bul1.htm).
|
