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Bottoming out
“ The extent of the decline in the market does not necessarily mean that prices recover well on the upside ”
Andrew Milligan Independent economist
market fall , because it could prove to be a precursor to an even larger decline . Or worse still , “ a situation where the market falls and does not recover for a long time ”.
Three bears “ It is important to differentiate between a market correction , a bear market , and a prolonged slump in asset prices ,” Milligan adds .
While there are no official definitions , he views a correction as a fall of 10 %, a bear market as between 10 and 25 %, and a prolonged slump as anything more than that . “ The extent of the decline in the market does not necessarily mean that prices recover well on the upside ,” he says . David Coombs , head of multi-asset investments at Rathbones , also points to occasions where markets have failed to stage a speedy recovery following a crash and ended up drifting for years . He highlights the potential for a severe correction to spark a second
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