A bear market occurs when a market experiences a prolonged period of downward trend in price of the underlying asset, security, or index. It usually consists of a series of declines in prices, and is proportionately more severe than a corrections as it can extend for as long as several months or even years.

When it comes to the stock market, bear markets usually refer to a decline of 20% or more in market index, although some investors refer to any decline greater than 8% as a bear market as well.

The declines can be seen in virtually every type of asset in a market including stocks, bonds, commodities, and currencies. During a bear market, many investors believe that the market is no longer an attractive place to invest, and so the demand for stocks and other assets tends to decline. This, in turn, causes prices to fall further and can send the market into a self-reinforcing decline.

In such bear markets, there are opportunities for investors to make profits by short selling, put options, or other inverse/hedge products such as inverse ETFs that go up in value when markets fall. These activities can help investors protect their portfolios from further decline.

It’s important for investors to remember that bear markets don’t last forever. In fact, many times, bear markets can actually provide the opportunity for investors to buy low and benefit from cyclical rebounds when markets recover. This is why it’s important to have an understanding of the market and to have the discipline to stay invested during such market dips.

Ultimately, bear markets can be seen as normal fluctuations in the market that offer investors the opportunity to make returns if they know how to find and capitalize on the right investment opportunities.