Definition
A sustained market decline, conventionally a drop of 20% or more from a recent high. Bear markets arrive regularly, feel terrible while they last, and in broad U.S. market history have always eventually given way to new highs.
Why it matters
Most permanent damage in bear markets is self-inflicted: selling low, then buying back high. A plan made in advance (keep contributing, keep the allocation) is the real defense.
Example
A $200,000 portfolio falls 25% to $150,000. An investor who keeps buying through the decline picks up shares at marked-down prices; one who sells at the bottom and returns after the recovery converts a paper loss into a real one.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.