Glossary · Stocks and markets
Bear market
A bear market is a fall in stock prices of 20% or more from a recent peak, usually with gloomy news and investors expecting worse.
Also called: bearish market, market downturn, falling market
Monthly average, Oct 2026: at its record.
Dec 2021 to Oct 2022, monthly averages.
In plain words
Stocks drop 5% one week and 3% the next; people start to worry; companies warn about profits; prices keep sliding. Once a market has fallen 20% from its peak, it is in a bear market: a long, deep slide rather than a quick dip.
The 20% line is a convention. A fall of 10% to 20% is called a correction; a sudden fall over a few days is a crash. A bear market ends at its low, which is only known later, once prices have climbed 20% from it and a new bull market has begun.
Counting with monthly averages of the S&P 500, there have been 14 bear markets since 1929. The average one cut prices by −37% and lasted 18 months from peak to low.
Example
Why the way back takes longer
- Your stocks are worth $10,000 at the peak. A bear market cuts them by 35%, to $6,500.
- To get back to $10,000 they must gain $3,500 on $6,500: +54%.
- A 50% fall needs a 100% rise to recover; a 20% fall needs 25%.
- If the market then grows 8% a year, the climb from $6,500 back to $10,000 takes about five and a half years.
That arithmetic is why the deepest bear markets took years, sometimes decades, to recover.
One level deeper
Many bear markets come with a recession: profits fall, unemployment rises and investors demand a bigger reward for risk. Others start when a bubble bursts, when interest rates jump, or with a shock such as a war or a pandemic. Stocks usually start falling before the economy weakens, and start rising before it recovers.
The deepest one on record was 1930–32, when the S&P 500’s monthly average fell 81%. The shortest since 1929 lasted 2 months. The latest ran from Dec 2021 to Oct 2022, a fall of 20.3%.
Monthly averages hide the worst days. In 2020 the S&P 500’s daily closes fell about a third in five weeks, but only the March average was much lower, so on this monthly count 2020 shows as a fall of less than 20%. The same goes for 1966 and 1980–82, which lists based on daily closes count as bear markets.
Every bear market since 1929, by its fall
How far the S&P 500’s monthly average fell from each peak to the following low. The early 1930s had several in a row; since 1950 there have been 7.
The numbers behind the chart
| Fall from the peak | |
|---|---|
| 1929 | 34% |
| 1930–32 | 81% |
| 1932–33 | 25% |
| 1934–35 | 26% |
| 1937–38 | 45% |
| 1938–42 | 40% |
| 1946–49 | 25% |
| 1961–62 | 22% |
| 1968–70 | 29% |
| 1973–74 | 43% |
| 1987 | 27% |
| 2000–03 | 44% |
| 2007–09 | 51% |
| 2021–22 | 20% |
Why it matters
Bear markets are when most investors’ losses happen, and when many give up and sell near the bottom.
They test whether a portfolio can be held through bad times: a 50% fall is far easier to accept on paper than in your own account.
They often come together with recessions, job losses and falling home prices, so they can hit people twice.
A common mistake
Myth: A bear market means the economy is in a recession.
In fact: Often, but not always. The S&P 500 fell sharply in 1987 with no recession, and the 2022 bear market came while unemployment stayed low. Stocks price the future, so they can fall on fears that never come true.
Questions people ask
How long do bear markets last?
Counting with monthly averages, the S&P 500’s bear markets since 1929 lasted 18 months on average from peak to low, from 2 months to several years. Getting back to the old peak usually took longer than the fall itself.
What is the difference between a bear market and a correction?
Depth. A correction is a fall of 10% to 20% from a peak; a bear market, 20% or more. Corrections are far more common.
Are we in a bear market now?
In Oct 2026, the S&P 500’s monthly average was at its record. A bear market takes a fall of 20% or more from the peak.
Read more on BigCapital
About the numbers
- The numbers on this page are recalculated from the data every night; the sources are listed at the end of the page.
- S&P Composite price and total return since 1871, and US consumer prices: Robert J. Shiller, Online Data (shillerdata.com); total return with dividends reinvested monthly, calculated by BigCapital.
- Turning points found in monthly averages of daily closes: a peak or a low is confirmed only after the next 20% move. Our stock market crashes article counts falls from a record high instead, so its list is shorter: a fall that starts below an older record is not counted there.
- This page explains a term. It is not investment advice.