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Adam Farren

A bear market is a prolonged period in which investment prices fall. It is the opposite of a bull market, a period when stock prices are consistently rising. Bear markets are accompanied by a lack of confidence of pessimism among investors. Not all periods of declining stock prices are bear markets - if the period of price declines is short, and immediately followed by a rise in stock prices, the dip is instead called a correction.

There is no single definition of a bear market, but a commonly accepted technical analysis indicator is price declines of 20% or more in the overall market over a two-month period. Other measures say that stocks have hit a bear market when at least 80% of all stock prices fall over an extended period of time; another approach finds that if certain market indices like the Dow Jones Industrial Average and the S&P 500 -- fall at least 15% then a bear market has occurred.

A commonly accepted fundamental analysis indicator is when the Leading Indicators index falls during four of seven months and the Coincident index falls for three straight months.

Bear markets usually occur when the economy is in a recession and the unemployment rate is high, or when inflation is rising quickly. Historical analysis of bear markets in the United States generally includes the Great Depression in the 1930s and again from 1973 to 1982, in a period characterized by the term stagflation. A wider definition includes bear markets in 1946, 1956, three instances in the 1960s, 1987, 1990, and 2002, among others.