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Bear Market
A bear market is a consistent drop in the stock market indexes over a fairly long period of time. Bear markets begin when the economy seems to be running at full steam. Investor expectations tend to be very high and this irrational exuberance can contribute to the beginning of a market top. It is often marked by widespread pessimism once the fall is under way and investors anticipating further losses are often motivated to sell, with negative sentiment feeding on itself in a vicious circle.
Prices fluctuate daily on the open markets. To illustrate the example of a bear stock market, it is not a simple corrective decline, but a substantial drop in the prices of almost all stocks over a certain period of time. One commonly accepted measure of a bear market is a price decline of 20% or more over at least a two-month period.
Monumental Bear Markets
The most infamous and well known bear market in history was after the Wall Street Crash of 1929 which erased 89% of market capitalization by July 1932, marking the start of the Great Depression. After slowly regaining around 50% of its losses, a longer bear market from 1937 to 1942 happened in which the stock market was again cut in half. A less extreme long-term bear market happened from about 1973 to 1982, with the stagflation of the U.S. economy, the 1970s energy crisis, and the high unemployment of the early 1980s. A notable bear market occurred between about March 2000 and October 2002 with the bursting of the internet era bubble and another one occurred between about October 2007 and March 2009.