What Is a Bear Market?
A bear market is a period of falling stock prices and pessimism, generally when a broad index falls 20% or more. How bear markets are defined, how long the math of recovery takes, and why timing them is hard.
In one sentence
Bear market. A period of falling prices and pessimism, generally when a broad market index falls 20% or more over at least two months.
How it's defined
A bear market is a time when stock prices are declining and sentiment is pessimistic, generally when a broad market index falls 20% or more over at least two months.1 The opposite, a sustained rise, is a Bull market. A period of rising prices and optimism, generally when a broad market index rises 20% or more over at least two months. Glossary.
The math of recovery
| Fall | Gain needed to recover |
|---|---|
| −20% | +25% |
| −33% | +50% |
| −50% | +100% |
Losses take bigger percentage gains to undo, because the recovery starts from a smaller base. Drawdowns and the Math of Recovery works through it.
What it means for investors
Bear markets are part of owning stocks. They're hard to time, because prices often fall before the bad news is clear and recover while it's still grim. What helps most is preparation beforehand: money needed soon kept out of stocks, an allocation you can hold, and a plan for what you'll do.
Learn it properly
- Bull Markets, Bear Markets, and RecoveriesPart 6: Strategy, Behavior, Accounts, and Taxes
Notes and sources
- Investor.gov, U.S. Securities and Exchange Commission. Glossary: Bear Market. Checked 2026-10-06. Back to text