Recently, we often hear bear market word. Investor worry about bear market because their investment will decrease much. They will loss much money and no one guarantee it.
Why bear market occurs? There are various reason which make the market bear. The macroeconomic condition such as budget deficit, unemployment, inflation, and GNP. Bear market occurs as the company profit decreases or the correction for the overvalue of stock price.
The stockholder worry with recent condition which decreasing company’s profit. The sales of the company fall down into valley so the profit is decreased.Â Off course, it will decrease the dividend too and people tend to sell it. The increasing investor amount which want to sell their shares make the stock price low.
Another caution of bear market is the recover of unreasonable high stock price. Some company has shares which the price higher than book value over many times because the demand of the stock is very high. A rumor could boost the share price to the sky in a short time.
When dotcom bubble, most people buy this new industry shares. The greed investor and speculator just want profit for temporary only. They also blow the high profit issue to boost dotcom demand. When the bubble blast, Most investor suffer loss including the big investor like insurance company, pension fund, mutual fund company, etc.
When the market bear, your stock price will decrease more than twenty percent which means your investment value decreases. Some investor and speculator could get return from bear market. They do short sale to loser stock. They hope the stock decrease and get profit in short time. I do not recomend short sale for you.