A secular bear market is a mirror image of a bull market. It is an extended, multi-year period of negative market movements. From the third stage of a bull market, a bear market starts to develop and share prices keeps heading lower and lower. Bear market is also characterized by sharp intermittent rallies followed by further selling.
Right before the first stage of a bear market, the economy is usually very strong. Predictions of new extraordinary highs in the market are rife and interest rate reach multi year high. In the first stage there is a complete disbelief that a bear market can even occur. As markets fall, leveraged positions are sold off to cover margin calls. This results in extreme price moves. A lot of people are still in their bullish mind frame and believe that with dips market should be bought into.
In the second stage, investors are in a shock that how the market which showed so much promise just a while earlier can tank so badly. A lot of individual investors go into denial.
In the final stage, there is a selling cresendo with huge volumes. Those who had held on their stocks earlier with the hope of selling at a higher price decide to get out at whatever price they get. That is total desperation. By the end of third stage, investors will start finding companies at extremely low valuations.Low single digit P/E multiples become common. On the way to bottom, several corporate misdeeds come to light. Frauds that got hidden in the bull market excesses become apparent.