It’s helpful to know what a “bear market” is because based on history, it looks like we could be here for a while.
The term on Wall Street is synonymous with serious, long-lasting declines in stock markets. In numeric terms, a bear market is a 20 percent or more drop from a recent peak.
The S&P 500 hit that milestone on Monday, dropping 20 percent from its 52-week high. Markets have stumbled through what is usually one of their best months of the year, with indexes on track for their worst December performances since the Great Depression in 1931.
Aside from a percentage drop, there other, more emotional ways to measure a bear market.
Pessimism tends to prevail. When good news isn’t enough to hold off sellers and despite solid economic conditions, markets continue to tank — that’s a bear market. The glass-half-full scenario is often overlooked and any positive news seems to be forgotten by the close of trading.
In December, oversold markets have struggled to make a comeback, suggesting that investors are worried about something bigger. Still, economic fundamentals are not giving red flags of a recession, which is usually a necessary condition for a full-fledged bear market.