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Updated 2mo ago.
Updated 2mo ago.
A bear market is a prolonged period of declining stock prices, generally defined as a 20% or greater drop from a recent high. It reflects investor pessimism and often an economic slowdown.
In 2022, rapid interest rate hikes triggered a bear market. The S&P 500 fell about 25% between January and October 2022. Bond ETFs like ZAG.TO also lost ~10%, an unusual situation where both stocks and bonds declined simultaneously.
An investor holding VEQT.TO saw their portfolio drop about 15%, but if they maintained their regular purchases, they benefited from lower prices to accumulate more units.
Bear markets are normal and inevitable. Since 1950, there has been roughly one every 5-6 years on average. It is during these periods that investment discipline makes the difference: panic selling locks in losses, while continuing to invest regularly lets you buy at a discount.