The definition of this market is that this happens when the stock's decline of at least twenty percent from the peaks. A correction is when the stocks fall to ten percent. You will have to be careful about when the bear stock market hits and you will have to handle your assets accordingly to not lose out during the months that it lasts. It helps to have a brief overview of the bear stock market if you are new to the world of stocks and share market. So, to help you out in that matter, here are two of the important things that you need to know about this market.
The Period For The Market
In the average calculations, the market fully recovers its value within an average of about ten to twelve months. The average market lasts for fifteen months, with stocks declining to about thirty-two percent. The markets are generally shorter than the bull markets. The bull markets can last as long as nine years.
The Things That Can Set Off A Bear Market
The markets of the past fifty years have had many different causes. At times, it is an external shock often led by political causes. For instance, the 1973-74 correction started by the growth of the Organization of Petroleum Exporting Countries is the market that was started by the invasion of Kuwait by Iraq. The similar thing happened in the 1982 market by the Federal Reserve. This time the interest rates increased to punishing levels in a successful bid for crushing inflation.
At times, the markets occur as the market decides that the economic fundamentals cannot support the stock prices. Sometimes it is because the economic factors change in the ways which make the investors change their mind.
Something that turns a correction phase into a market can be the psychology of the investors. Since most of the investment, especially during the short term is all about trying to guess the ideas of other investors and reacting accordingly, selling can lead to more selling. People who think that other people are selling might try to get out of the position before they start to lose more value, which depresses stock prices on a short term basis. The current rate of correction in the bear market is the nearest to the overvalued-asset model. If you are careful enough, the market will not hit you too hard this time.
Research and know more about the market if you have just stepped into the world of shares and stock markets. The more you know about the market, the better position you will be in to save your assets.