What’s a bear market? An economist explains

In my money and banking classes, I teach students about the efficient market hypothesis, which states that stock prices are rational, in that they are always fairly priced based on available information. [...]when there are big swings in the stock market, it’s hard for my students and others to resi...

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Bibliographic Details
Published in:The Conversation : Economy + Business 2022-06-17
Main Author: Tennekoon, Vidhura S
Format: Newspaper Article
Language:English
Subjects:
Bear markets
Bull markets
COVID-19
Efficient markets
Prices
Stock exchanges
Online Access:Request full text
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Summary:In my money and banking classes, I teach students about the efficient market hypothesis, which states that stock prices are rational, in that they are always fairly priced based on available information. [...]when there are big swings in the stock market, it’s hard for my students and others to resist using more emotive terms like “bulls” and “bears,” which call to mind the “animal spirits” of investing. Why a bear market matters A bear market may signal a recession is coming, though it’s not a perfect correlation. Since World War II, there have been three bear markets – out of a total of 12 – that didn’t precede a recession.