Bear Market

The 20% threshold is the widely accepted convention that separates a bear market from a shorter, milder drop. It is measured from the most recent closing high to the closing low, not intraday extremes. Once that line is crossed, analysts formally declare a bear market has begun — even if the low was already reached and prices have started recovering.

Bear markets can hit a single asset class, a sector, or an entire index. When traders talk about "the market" entering a bear phase, they usually mean a major broad index — such as a country's flagship stock benchmark — has crossed the 20% line. You can track broad equity moves on the stocks page or compare them across countries.

A common confusion: a bear market is not the same as a recession, though the two often overlap. A recession is defined by economic output (GDP contracting), while a bear market is defined purely by price. Markets sometimes enter bear territory without a recession following, and recessions sometimes begin before prices fall 20%. The concept pairs closely with its mirror image, a bull market, and with the shallower correction.

Historically, bear markets have varied widely in length and depth. The severity matters less for the definition than the 20% rule itself. What makes them "sharp and scary" in practice is that the drop can accelerate — a market already down 20% can fall another 20% before stabilizing, compounding losses for anyone watching price-change columns move relentlessly negative.