What Does "Secular Bear" Mean?

Understanding the stock market can be challenging to a newcomer, but learning the terminology can quickly demystify much of it. Before you can understand what "secular bear" means, you need to learn what "trend analysis" is.

Trend Analysis

The key to profiting in the stock market is to trade in the direction each asset seems to be heading or "trending." This is why accurate trend analysis is highly valued. A market trending upward is called a "bull market" while one trending downward is a "bear market." Once a trend continues for years, it is referred to as a "secular market."

Bear Markets

A short downward trend in the market is called a "market correction," but when the correction continues for more than two months, it starts being known as a "bear market." As of 2010, the most famous bear market in history is the 1929 stock market crash. It took investors a quarter of a century to recover from it. Bear markets tend to make investors pessimistic, which often leads to a further downward trend.

Effects

If pessimism and losses continue for years, the bear market graduates to "secular bear market" status. Rather than seeking long-term investments, those who choose to stay in the market tend to lean toward short-term investment and diversification of assets. The difference between guessing correctly or incorrectly can literally be a fortune.

References

• Bear Market Definition
• Surviving Bear Markets
• Will the bear be with us a long time?