What is Bear Market? How does it happen in 4 stages?

Bear market is the name given to the periods when stock prices started to decline. In the bearish trend, the approach of the markets is pessimistic, prices are declining or expected to decline in the near future. As the price of assets decreases, share prices will decrease as investors ‘expenses incurred by the investor will increase, and investors’ self-confidence will be hit.

Bearing trend trends and characteristics of the trend vary depending on the circumstances, but in each case the factors such as investor’s feelings, the cycle of the weakening economy play an important role in the course of the trend and how long it takes.

Some signs of a weakening economy include:

*Lack of business opportunities
*Decrease in available income of the general public
*Decrease in profitability in business sectors
*New declines in trade and bottom hit
* Increased use of short selling and selling options in the stock exchange
*Unexpected changes in government indices and some tax rates

Bear Trend Usually in 4 Stages
In the first phase, investors’ morale and returns are high, but investors leave the market with maximum profit.

In the second phase, stock prices begin to fall rapidly, companies’ earnings and trading activities decline and positive economic indicators do not perform well.

Investors’ trust gradually begins to be replaced by pessimism. This can cause panic. Market indicators also indicate that stocks are in decline and dividend payments are extremely high. This is also an indication that more money should be introduced into the system.

The most important feature of the third phase is the introduction of speculators as prices and transaction volumes increase.

In the last phase, prices continue to fall, albeit at a slower rate. This is considered the bottom of the downturn, and investors are now positively thinking that everything will begin to improve; so the bear trend is replaced by the bullish trend.