A bear market is opposite of a bull market. While the bull market is optimistic and rosy, the bear market is on a downward path. It usually means that the economy is struggling, as well.

The bear market begins with a downward trend in stocks and securities. Concerned with the decreasing prices and losing money and anticipating further losses, investors begin to sell off their stocks and other securities.

Prices fluctuate on the market all the time. A one week or even one month decline in the market is not a trend. A bear market is distinguished by a twenty percent loss over a period of several months. However, bear markets are less definable than bull markets. Perhaps the real defining factor of a bear market is the overall pessimistic feeling on the market.

Surviving a Bear Market

It is possible to get through a bear market on a positive note. The first trick is to recognize that the good times cannot last forever. The market will eventually have to adjust itself. Nor can the bad times last forever. The investor who remains realistic and does not panic when times are not so good will be more prepared to survive a bear market.

The best thing to do during a bear market is to sit quietly, or play dead as if running into a live bear, as the Wall Street saying goes. To “play dead” on Wall Street means to put a larger part of the investor portfolio into the money market rather than in stocks. Cash that is not invested will not lose its value, and it will be available when the market begins its upward swing.

This is also a good time to buy value stocks. Even time-tested, well-respected stocks can see a big enough slide in a bear market and will likely rebound with a bull market. There are also some industries – and hence their stocks – that remain strong even in a bear market because of the need for the goods or services. Those stocks include items like health and beauty products and other household products.

Caution is the key word during a bear market. Just because stocks are low does not mean every stock is a good buy.