A bear is a trader or investor who expects a market, sector, or instrument to fall, and a bearish view is that same expectation of lower prices. A bear holds a negative outlook and may use short selling or put options to profit when prices drop.
A bear bases the view on signals such as weak earnings, recession risk, high interest rates, poor economic data, or prices that look overvalued against underlying value. A bear then sells existing positions, opens short positions, buys put options, or trims risk exposure.
Bear is the opposite of bull. A bull expects prices to rise, while a bear expects prices to fall. A sustained fall of around 20% or more from recent highs is called a bear market.
You believe the S&P 500 will fall because corporate earnings are weakening and interest rates remain high. You open a short position through an index CFD at 5,000.
If the index drops to 4,800, the short gains in your favour:
5,000 - 4,800 = 200 points
If the S&P 500 rises to 5,200 instead, the position loses 200 points because the market moved against your bearish view.