A bear market occurs when a market experiences prolonged price declines, typically defined as a drop of 20% or more from recent highs. This market condition often reflects pessimism, low investor confidence, and economic uncertainty.

During a bear market, stock prices fall consistently, trading activity decreases, and market sentiment becomes negative. Common causes include:

• Economic recessions
• Global crises
• High inflation or interest rates
• Political uncertainty
• Major market corrections

Bear markets typically last between 9-16 months, though duration can vary significantly. The most recent notable bear market occurred during the COVID-19 pandemic:

• Timeline: February 2020 - March 2020
• Trigger: Global COVID-19 spread, economic uncertainties, and lockdowns
• Impact: S&P 500 declined approximately 34%
• Recovery: Markets rebounded by August 2020, aided by government intervention

Key indicators of a bear market:

• Sustained 20% decline from recent highs
• Negative economic indicators
• Declining corporate profits
• Reduced market confidence
• Increased market volatility

Counter-cyclical investing during bear markets can be profitable:

• Financial Crisis 2008/2009: Investors who bought during market lows saw significant returns during recovery
• Pandemic 2020: Those who invested during March 2020 benefited from the swift market rebound

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