How Often Bear Markets Occur and 7 Other Facts About Them

Bear markets can be terrifying, but they're normal, inevitable and – most importantly – they don't last forever.

what is a bear market?
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What is a bear market, anyway?

Well, for one thing, a bear market is one of the scariest events equity investors regularly confront. And yet as unpleasant as they may be, steep and sustained drawdowns in stocks are an absolute fact of investing life.

Markets go through cycles; always have, always will.

It's also true that despite being miserable experiences, bear markets are not entirely all bad. An irony of bear markets is that they're one of the exceedingly rare times when long-term retail investors can actually have an advantage over the pros.

Traders and tacticians are under constant pressure to do something, even as a receding tide lowers all boats. Contrast that with retail investors, who are luxuriously free from clients yelling at them all day. Normies can just sit back and dollar-cost average into stocks at increasingly cheaper prices.

Most importantly, a patient long-term investor who is diversified in accordance with his or her age, stage in life and risk tolerance can not only wait out a bear market, but profit from it. Remember: The market can be downright awful at times, but its long-term trend is always to the up and right. Don't forget the old Wall Street saying: "You make your money in a bear market. You just don't know it at the time."

Folks these days are understandably focused on inflation, rising interest rates and the possibility of recession. But a familiarity with the basics of bear markets should help investors better cope with the next bear market. To that end, we've compiled the following facts to help answer the question, What is a bear market?

Dan Burrows
Senior Investing Writer,

Dan Burrows is Kiplinger's senior investing writer, having joined the august publication full time in 2016.

A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. He has written for The Wall Street Journal, Bloomberg, Consumer Reports, Senior Executive and Boston magazine, and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among other publications. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities.

Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.

In his current role at Kiplinger, Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics, demographics, real estate, cost of living indexes and more.

Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.

Disclosure: Dan does not trade stocks or other securities. Rather, he dollar-cost averages into cheap funds and index funds and holds them forever in tax-advantaged accounts. 

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