Bear Market Definition – A Bear Market is a prolonged period during which investment prices fall, accompanied by widespread pessimism. If the period of falling stock, commodity, or currency prices is short and immediate, followed by a period of rising prices, it is called a correction. Bear markets usually occur when the economy is in a recession and unemployment is high, or when inflation is rising quickly. The most famous bear market in United States history was the Great Depression of the 1930s, although our current recession has been the longest one since that time. The term “bear” has been used in a financial context since the early 1800s. While its origins are unclear, the term may have originated from traders who sold bearskins with the expectations that prices would fall in the future. The more positive term, used to describe the opposite reaction of markets, is a Bull Market.
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