Do you know what a 'bear market' is? We need to remind ourselves, as recent falls in stock markets have prompted commentators to use the phrase more often.
The term 'bear market' is used to describe a prolonged and significant fall in general share prices. 'Bears' are traders who expect share prices to fall. The opposite term, used for a prolonged rise in share prices, is a 'bull market'. There is no standard measure, but, to be prolonged, a fall might last two months or more. Some argue that the fall should be at least 20% from a recent high.
How do we monitor overall prices in a market? Analysts calculate an average result, called an 'index'. One popular such index is the FTSE 100 share index - a number used to track the market value of the top 100 listed UK companies. ('FTSE' stands for 'Financial Times Stock Exchange'.) The index began in 1984 at the starting value of 1000.
On Friday, the FTSE 100 share index had fallen 19.6% from its high in October 2007. This gets close to the 20% fall which, according to some, would mean we are in a 'bear market'.
