Bear in Finance

Bear

A bear is a broker on the stock exchange who sells shares, stocks or other securities for future delivery anticipating a fall in price. He is an investor who believes that a particular security or market is headed downward and attempts to profit from a decline in stock prices. He is an investor who believes a stock or the overall market will decline. Investors generally fall into two mindsets: those with an optimistic outlook who foresee prosperity, called “bulls,” and those with a pessimistic outlook who foresee decline, called “bears.”

A bear market is a prolonged period of falling stock prices, usually by 20% or more.  A bear market is a period marked with falling stock prices. At the time of making a contract of sale, he does not possess such securities. Many investors opt to sell off their stocks during a bear market for fear of further losses, thus fueling a vicious cycle of negativity.

Bears are typically pessimistic about the state of a given market. He anticipates that their prices would decline so that when the time for delivery of those shares or stocks arrives, he may be able to buy them at a lower price and deliver ‘them at contracted (higher) price and thus to realize a profit. A bearish investor will alter their portfolio strategy by liquidating securities they believe are going to lose value in the foreseeable future. Bearish sentiment can be applied to all types of markets including commodity markets, stock markets, and the bond market. He takes the appropriate steps to limit losses during the period that they believe that the security will decline.