BEAR MARKET

       As  I was making this blog entry, I was also watching the movie, Over the Hedge, which  is about RJ the raccoon who tried to steal the foods and stuffs owned by Vincent the bear. Unfortunately those stuffs were crushed by a truck and he was caught by the bear. What does the movie have anything to do with my topic then? Not that much actually, although it just showed there the fear of RJ being killed by Vincent the bear if he could not replaced the items before Vincent is fully awake from his hibernation. The bear in the movie is portrayed as a fearsome character. Just like in the stock market, bear market is being feared by stock investors. But what actually is a bear market?

       A bear market is a general decline in the stock market over a period of time. It is a transition from high investor optimism to widespread investor fear and pessimism. According to The Vanguard Group, "While there’s no agreed-upon definition of a bear market, one generally accepted measure is a price decline of 20% or more over at least a two-month period."

       A bear market followed the Wall Street Crash of 1929 and erased 89% (from 386 to 40) of the Dow Jones Industrial Average's market capitalization by July 1932, marking the start of the Great Depression. After regaining nearly 50% of its losses, a longer bear market from 1937 to 1942 occurred in which the market was again cut in half. Another long-term bear market occurred from about 1973 to 1982, encompassing the 1970s energy crisis and the high unemployment of the early 1980s. Yet another bear market occurred between March 2000 and October 2002. The most recent example occurred between October 2007 and March 2009.

source: http://en.wikipedia.org/wiki/Bear_market#Bear_market

       So its been some time that my portfolio was in the red zone... Are we already having a bear market at the moment? If we just read the news in the web and browse forums that discuss about stock market, there they were mentioning about market correction going on. What does this mean? There is no need to panic for us investors because it is an opportunity to accumulate more stocks as fundamentally sound stocks are now in a bargain! It is a good time to enter the stock market if you haven't started yet because we are still in a bull market only having a market correction and not in a bear market.

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