bear market

A prolonged decline in the stock market that exceeds 20%, usually accompanied by pessimistic investor sentiment and weakened economic prospects. Bear markets can be as short as a few months to as long as several years. Declines of 10.0% to 19.9% are called corrections; historically, stocks have recovered at a more rapid pace from corrections than from bear markets. Declines of 5.0% to 9.9% are called pullbacks. When calculating performance numbers for AAII’s fund guides and stock screens, we look at the performance of several indexes to determine if a new bear market (or bull market) period has started.