Bear Market Explained
The worst market that the country has ever faced was during the Great Depression. This lasted from 1929 to 1932 and values declined roughly 89% from their peak in 1929 to where they were in 1932. It is estimated that most people who bought stocks around the midway point of 1929 did not see their stock values come back to that same point until much later in their adult lives. There have been other markets such as during the 1970s when the United States was battling interest rate problems and had the oil crisis but these were not as severe. One bear picture that can be seen is how quickly stocks dropped in 2008. There was a decline from the previous high in 2007 and this particular decrease in the stock market greatly eclipsed the 20% normally seen in a market. There were large declines because of the concern about sub-prime mortgages and concerns about the impact on the viability of many financial businesses embroiled in the sub-prime mortgage industry. The market has continued to remain in its current state due to the concern over long-term economic issues such as high unemployment, low consumer confidence, and declining home values. There have always been debates on Wall Street about who is a Bull and Bear. Much of that talk can center on who is optimistic on the economy and who is pessimistic about the economy. When looking at the economy of 2009, many more people will call themselves Bears instead of Bulls. It can really be called a perfect Bear Market Picture. The Bulls will come out from the woodwork when they can see returning good long-term economic factors such as low unemployment, strong profit growth, and strong consumer confidence. As this article has pointed out, a good general definition of a bear market is the decrease of twenty percent in value. A bear market will typically follow a similar trend line as economic problems that have to be worked out. Look at what happened with the Great Depression or high unemployment that existed in the late 1970s and into the early 1980s. This can also be helpful when talking to different people about the stock market and their viewpoints on where it will go.
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