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A Bear Market is defined by falling prices of at least 20%, a lot of pessimism, and tends not to discriminate with most Sectors and Stocks suffering price declines.

In the Stock Market, a Bear Market defined by market technicians, is when an Index declines by at least 20% from its recent highs. Not the all-time highs of an Index achieved in the past or distant past. A true Bear Market is surrounded by pessimism and negative investors, or “Bears”. A Bear Market can be described by either a Market Index, S&P500 or a Sector Index, for example, Technology. When the Stock Market is in a true Bear Market, the market can experience a prolonged period of price declines. As the stock market enters into a Bear Market, commonly the higher Beta stocks are impacted first.

• What causes a Bear Market?
• What are some initial indications of the pending arrival of a Bear Market? • How could different Stocks or Sectors react?

The causes of a Bear Market could commonly be attributed to a number of factors such as stretched Valuations or a pending economic recession or rising Interest Rates. An initial indication of a Bear Market could be a spike in Volatility as falling prices accelerate as initial fear sets in, the VIX is a good indicator. As sentiment turns there is limited discrimination and most stocks will incur price declines. In general the Defensive Sectors, Utilities, Consumer Non-Cyclical could incur less prices declines. A Bear Market is the polar opposite to the Bull Market.


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Warren William

Meet the author behind Smartest-Data. Warren William has a career in Finance and Investments extending over 35 years, both on the Buy Side and Sell Side. His most recent roles include, developing Institutional Risk Management Programs for managing Equity and Fixed Income Risk.  Prior to this Warren William work in Alternative Investments, in Investment Management and as a Buy Side Equity Analyst. Warren William brings a wealth of knowledge and expertise to the table, providing in-depth analysis and commentary on the latest trends in the Stock Markets. Contact information: or Telegram +393339034488

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