During a bull market, optimism grows, prices climb and investing can feel easy, which sometimes tempts people to take on more risk than is wise. During a bear market, prices fall, pessimism spreads and headlines turn gloomy, which can frighten investors into selling at low prices. A fall of roughly a fifth or more from a recent peak is often what people mean by a bear market.
These swings are a normal feature of investing, not a sign that something has broken. Historically, markets have recovered from downturns and gone on to reach new highs, although it can take time and there is never a guarantee about how long it will take. Knowing that both phases are part of the journey makes it easier to stay calm when conditions change.
The main danger of market cycles is not the falls themselves but how investors react to them. Selling in a panic during a bear market can turn a temporary decline into a permanent loss, while chasing excitement at the top of a bull market can mean paying too much. A steady, long-term plan is designed to carry you through both.
This content is general information, not investment advice.