Ken Fisher: How to Spot a Big Bear Market

Ken Fisher addresses the perennial challenge of distinguishing between short-term market corrections and sustained bear markets. He defines bear markets as declines exceeding 20% in broad market averages, while corrections are drops between 10-20% that are typically short and sharp. Fisher notes these percentage thresholds are somewhat arbitrary, and markets that drop below 20% are usually classified as bear markets regardless of duration. The key distinction Fisher makes is that sustained bear markets behave very differently from corrections - they tend to start gradually with a rolling pattern rather than sharp declines. He provides a crucial timing framework for major bear markets accompanied by recessions: the first two-thirds of the bear market's duration typically accounts for only one-third of the total percentage decline, while the final third of the time period sees two-thirds of the total drop. Fisher emphasizes that the most important factor to watch for in identifying a major bear market is 'that big bad thing that people aren't talking about' - an underlying issue that allows initial problems to cascade into a severe, prolonged decline.