What is a bear market?

A bear market is like a period of gloomy weather for the stock market. Imagine you're planning a picnic, but suddenly, dark clouds roll in, and it starts to rain heavily. Your picnic plans are ruined because the weather is bad.

In the world of stocks, a bear market is a bit like that rainy day. It's a period when stock prices are going down, and people are worried about the economy. During a bear market, the prices of many stocks fall, and it can be a challenging time for investors.

Investors often use the term "bear market" when the stock market has dropped by 20% or more from its recent high. It's like a signal that things might not be going well in the financial world.

Just like you might change your plans on a rainy day, investors in a bear market often adjust their strategies. They might be more cautious, sell some of their stocks, or look for safer investments until the rainy period (the bear market) ends.

Understanding bear markets is important for investors because it helps them prepare for tough times and make smart decisions with their money. So, if you want to learn more about how to navigate these financial storms, you might find my course on trading quite helpful!