Introduction to a Bear Market – The What, Why, and How Long

What Is a Bear Market?

A bear market is, very simply put, any single stock or index that experiences a severe decline in value over a sustained period of time. The technical benchmark is this: if a stock or index falls more than 20% from recent highs, then this stock or index is considered to be in a bear market. Quick note: An index is a collection of stocks. For example, the Straits Times Index (STI) is a name we give to all the stocks of Singaporean publicly-traded companies. So the value of one or a couple of companies’ stock is falling. Why is this happening and what does this mean?

Why Do Bear Markets Occur?

This is not a straightforward question to answer mainly because a bear market can happen for many...