Bear Market

Narrator: Stocks enter a bear market (soft scribbling) when they lose at least 20% of their value from a recent high. Let's look back at the 2020 chart. You can see when the market started to fall in February, it entered a bear market here just under a month later. The term is a shorthand way for Wall Street to mark when stocks have taken a tumble, a sign that investors are anxious about the future and moving away from risky assets. Speaker 1: There's a number of things that can make investors more risk averse. One, they can grow concerned about how stocks are valued and say, is this stock really worth what I think it's worth, or worth the premium that I'm putting on it? Have valuations run up too far, too fast? Narrator: This was a factor in a bear market in 2001, when a bursting market bubble drove down stock values. Speaker 2: I believe I was asked about the markets today. I'm sorry people are losing value in their portfolios. Speaker 1: Another really important factor is the economy. Often bear markets have been affiliated with economic recessions. So that's one thing that can really put investors on edge. Narrator: Recessions have accompanied nine of the last 17 bear markets. And while one doesn't necessarily cause the other, problems in the economy can be a major factor in bringing stocks down. High inflation contributed to one of the longest-bearing markets in history in the 1970s.