Which term describes a market condition where prices are falling or are expected to fall?

A bear market is characterized by a significant decline in the prices of securities, typically defined as a drop of 20% or more from recent highs. This term indicates a prevailing pessimism among investors, leading to the expectation that prices will continue to fall. In a bear market, economic indicators may signal downturns, and investor sentiment often shifts to fear and caution, which can exacerbate the downward price movements.

Understanding this concept is crucial for investors, as it influences their strategies and investment decisions. Recognizing a bear market can lead to more conservative approaches, such as distancing oneself from riskier assets or choosing to adopt a defensive investment strategy.