Part 28: Bear Market

Have you ever heard about the “bear market“? At first glance, the connection between bears and financial markets isn’t clear, but this term is historically rooted and used to describe the state of the market. Let’s understand what it means.

What Is a Bear Market?

A Bear Market is a situation where the market declines over a period of time, leading to negative investor sentiment and reduced confidence in the economy.

A bear market is generally considered to begin when the market declines by 20% or more from its most recent peak and this decline lasts for several months or longer.

This leads to a significant reduction in stock prices in the stock market, as investors sell off their assets to avoid greater losses.

A bear market is often accompanied by a slowdown in economic growth or a recession. High unemployment, a decrease in company profits, and a reduction in consumer spending contribute to the formation of a bear market. 

Why “Bear”?

There are different theories regarding the origin of the terms “bear market” and “bull market.” The most common explanation is linked to how these animals attack:

• The bear attacks by swiping its paw downward (from top to bottom), which symbolizes a drop in prices.
• A bull market is characterized by rising prices: the bull attacks by lifting its horns upward (from bottom to top).

Investments are subject to market fluctuations and carry inherent risks. As for strategies for navigating financial market fluctuations, check out Episode #5 of our podcast, where we discuss this topic.

Apricot Capital is regulated by the Central Bank of Armenia.

*The examples provided in this material are for informational purposes only. They do not constitute investment advice or a recommendation to buy or sell any specific security. The past performance mentioned in the text does not guarantee similar results in the future.