What's a bear market, and what does it mean for the average investor?

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Don’t panic, most financial advisers say. If you’re an investor — not a day trader — you’re in it for the long haul.

A bear market is defined by a broad market index falling by 20% or more from a recent high. And as of market close Monday, the S&P 500 index officially hit bear market territory. It’s down more than 21% year-to-date.

U.S. consumers “are dipping into savings, if their savings aren’t gone already. And eventually, that’s not going to sustain stock market growth,” he said. These numbers are the same for all investors, regardless of their investing strategy — but they may translate into different returns and volatility levels for active and passive investors.

Passive index fund investors will probably see less volatility because they will not have individual stock risk, Nelson said in an email interview.

 

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