T
he year 2020 ushered in the “bears” in major global markets. In the Philippines, the deep plunge in the stock market’s index last month clearly showed the end of the 11-year bull market. Since this bear was not caused by a coup, as it was in 1987 and 1989, or an external event, like the geopolitical wars in the 2000s and the 2008 global financial crisis, it is understandable that it is scarier than its precedents.
What is a bear market and why does it scare investors, seasoned or not? Investopedia defines a bear market as a “market condition in which the prices of securities are falling, and widespread pessimism causes the stock market’s downward spiral to be self-sustaining. As investors anticipate losses in a bear market and selling continues, pessimism only grows.”