Bear Markets, Bearish Investors

The bear markets begin with a distribution period. A minority of investors recognize that the market is overheated and that the current levels of activity and pricing can't sustained. They begin to sell their holdings.

As the buyers begin to thin out the market begins to decline and panic sets in. Prices are now begin to fall dramatically, on a high volume.

A secondary recovery normally takes place which is followed by the third phase, a bearish market. Business news is gloomy and depression abounds.

An investor who believes that a particular security or market is headed downward. Bears attempt to profit from a decline in prices. Bears are generally pessimistic about the state of a given market.

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