What is a bear market?

A bear market is a downturn in stock performance that encourages investors to sell their holdings rather than take a loss. The term "bear market" refers to the way that a bear will attack a foe, swiping downwards rather than upwards. Bear markets can be very short lived or very long, with large losses or a slow but steady decline over time. While investors may fear a bear market, there are several advantages to it, most notably the lower costs of buying in as well as the opportunity for investing in market derivatives (which will go up as the market goes down). A very severe bear market can lead to a market crash, which in turn can lead to a recession or even a depression.