Bear Market

A bear market happens when a major stock index drops 20% or more from its recent high. It’s the line that separates a routine pullback from something more serious. Bear markets are usually driven by a combination of economic slowdown, rising fear, and investors selling in a hurry.

How often do they happen?

More often than you might expect. Historically, bear markets in the U.S. have occurred roughly every 4 to 5 years on average, though they vary widely in severity and duration. Some last a few months, others drag on for over a year. The COVID crash in March 2020 was one of the fastest bear markets in history. Stocks fell over 30% in a matter of weeks, then recovered almost as quickly.

What it feels like

Numbers on a page don’t capture what a bear market actually feels like. Watching your portfolio drop 20%, 30%, or more is genuinely stressful. It’s when you see people panic-sell, lock in their losses, and then miss the recovery. The emotional side often causes more damage than the drop itself.

What to do during one

The research is pretty clear: selling during a bear market and trying to time the bottom is a losing strategy for most people. The recoveries tend to come fast, and missing even a handful of the best days can significantly hurt your long-term returns. That doesn’t make it easy to sit still, but understanding that bad months are part of the deal helps.

Example

If you had a $80,000 portfolio and the market dropped 25%, your portfolio would fall to $60,000. That $20,000 drop is painful. But if you kept investing $500 per month during the downturn, you’d be buying at lower prices. When the market recovers (and historically it always has), those shares purchased at the bottom become some of the best investments you ever made.