What is a bearish market?

The term “bearish market” refers to an investor viewpoint that the particular stock security, commodity, asset, currency, or the entire market will go down in value. The fall in stock prices is 20% or more. It is a pessimistic approach —investors speculate about a negative movement in stock prices and take a short position to benefit from it.

What does it mean to be bullish in a bear market?

In a bear market, many investors may choose to sit out of the market while others look for opportunities to profit on declining stock prices. When an investor is optimistic on a security price or market overall, they are said to be bullish.

What does a bear market look like?

In a bear market, investors expect stock prices to drop by 20% or more. The economic slump also presents a buying opportunity for investors. Falling markets are called “bearish” because the movement in stock prices resembles the attacking pattern of a bear. A bear uses its paws to slap down on its prey.

Are investors 'bearish' or 'bullish'?

Although some investors can be "bearish," the majority of investors are typically "bullish." The stock market, as a whole, has tended to post positive returns over long time horizons. A bear market can be more dangerous to invest in, as many equities lose value and prices become volatile.