# Bear Market

A bear market is a sustained decline of 20% or more in a broad market index from its recent peak. Bear markets are typically accompanied by widespread pessimism and reduced economic activity.

## Why it matters

Bear markets test investor discipline. Historically, they last an average of 9-16 months and are followed by recoveries that more than make up the losses. Selling during a bear market locks in losses, while staying invested — or even increasing contributions — has historically led to stronger long-term returns.

Example

The S&P 500 dropped 34% in early 2020 during COVID but recovered to new highs within 5 months — investors who sold at the bottom missed the fastest recovery in history.

## How Ray helps

Ray keeps your focus on your personal financial picture rather than market headlines. Ask to see your actual account performance in context, not panic-inducing index numbers.

Terminal

`$ ray "how has my portfolio changed in the last 6 months?"`

## Related terms

[Bull Market](/content/learn/bull-market/index.html)  
A bull market is a sustained period of rising prices in financial markets, typically defined as a 20% or greater increase from a recent low.  
[Diversification](/content/learn/diversification/index.html)  
Diversification means spreading investments across different asset classes, sectors, and geographies to reduce the impact of any single investment's poor performance on your overall portfolio.  
[Dollar-Cost Averaging](/content/learn/dollar-cost-averaging/index.html)  
Dollar-cost averaging (DCA) is investing a fixed amount at regular intervals regardless of market conditions.  
[Portfolio](/content/learn/portfolio/index.html)  
A portfolio is the complete collection of your financial investments — stocks, bonds, mutual funds, ETFs, real estate, and other assets.  
[Index Fund](/content/learn/index-fund/index.html)  
An index fund is a type of mutual fund or ETF designed to track the performance of a specific market index, like the S&P 500.