![]() ![]() From the beginning of October 1987 to 13 November 1987, the All Ords fell by 50%. DJI) in the United States lost almost 22% and marked the beginning of a global share market decline.īlack Monday hit Australian shores on Tuesday, 20 October, resulting in the ASX losing 26% in a single day. This was the name given to the day the Dow Jones Industrial Average Index (DJX. The bear market with the steepest fall occurred in 1987, sparked by the infamous Black Monday. īut this isn’t the only (or the sharpest) sell-off the Australian share market has experienced. Most recently, the All Ordinaries Index (ASX: XAO) plummeted from an all-time high of 7,255.20 on 20 February 2020 to 4,564.10 by 23 March 2020, shedding 37% in the space of a month as global markets reacted to the coronavirus pandemic. There are several real-world examples of bear markets here in Australia. Bear markets occur when share prices drop by 20% or more, whereas corrections typically involve price drops of about 10%.įurthermore, market corrections tend to last less than two months, whereas bear markets last two months or longer. One significant difference between a bear market and a market correction is the extent to which prices fall. The idea behind a correction is that falling prices serve to ‘correct' the situation because prices have risen higher than they should have. ![]() The technical definition is about a 10% decline in share prices in less than two months. market correctionĪ ‘ market correction’ is like a bear market but less severe. Unfortunately for investors, bull market periods that last too long can give way to bear markets. Bulls tend to charge with their horns thrusting upwards into the air, so periods of continually rising share prices are called bull markets. The term ‘bull market’ is derived from the way a bull attacks its prey. bull marketĪ bull market is one marked by strong investor confidence and optimism. The term ‘bear market’ relates to the manner in which a bear tends to attack.Ī bear will usually swipe its paws in a downward motion upon its prey, and for this reason, markets with continually falling share prices are called bear markets. When this happens, trading activity tends to decrease, as do dividend yields.Īt some point during a bear market, investors will typically try to capitalise on the lower share prices by reinvesting in the market.Īs trading activity increases and investor confidence begins to grow, a bear market can eventually transition to a bull market. This behaviour can cause widespread panic, and share prices can plummet when it does. ![]() Bear market phasesīear markets typically begin when investor confidence starts to wane following a more robust trading period and rising share prices.Īs investors grow increasingly pessimistic about the state of the market, they tend to sell off their investments to avoid losing money from the falling share prices that they anticipate. Many investors opt to sell their shares for fear of further losses, thus fuelling a vicious cycle of negativity. In a bear market, investor confidence is extremely low. ![]() The technical definition is a 20% or more decline in share prices over at least two months. During bear market periods, investing can be risky even for the most seasoned investors.Ī bear market is a period of falling share prices. ![]()
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