The first phase of a bear market is the distribution phase. This is where farsighted investors see the uninformed investors scrambling to buy shares. The farsighted investors begin to sell shares. Oversupply leads to weakening prices and profits are harder to come by. The second phase of the bear market is characterized by near panic selling.
Prices accelerate to the downside and more and more people begin to liquidate their holdings.
The third phase of the bear market is characterized by further weakening and erosion of prices. Lesser quality issues erase the gains of the previous bull market. The news is full of bad market news. Ltd. All Rights Reserved.