Bear Market
A bear market is a sustained decline in a broad index — the folk threshold is −20% from a peak, which is a headline, not a model.
Definition
Bear Market refers to the folk threshold is −20% from a peak, which is a headline, not a model. Keep that definition fixed when comparing series, managers, or regimes — renaming the same tape does not create a new signal.
Why it matters
Equity risk premia compress or expand with earnings paths and factor regimes. When the folk threshold is −20% from a peak, which is a headline, not a model shifts, related hedges, limits, and narratives usually need an explicit update rather than a quiet assumption.
Case
Suppose a desk is positioned for the opposite of what bear market is saying. If the folk threshold is −20% from a peak, which is a headline, not a model moves against that book, the first question is not “is the story clever?” but whether size, hedges, and stop logic still match the observation.
How to read it
Separate index beta from residual; know the sector and factor loadings of the claim. Prefer a short written null hypothesis for Bear Market: what would falsify the current reading in the next window?