The Australian share market has officially entered a bear market, defined as a drop of 20% or more from its peak.
The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has suffered a terrible start to the 2016 calendar year, plagued by heavy falls within the banking sector, further weakness from the miners and fuelled by a plunging oil price. It's down 1.8% today at 4,746 points and 10.4% since the beginning of the year, but down 20.8% since peaking at 5,996 points in April 2015.
Indeed, there is plenty of red in the market again today, led by companies such as Woolworths Limited (ASX: WOW) down 4.3%, BHP Billiton Limited (ASX: BHP) down 3.3%, and Australia and New Zealand Banking Group (ASX: ANZ), which has shed 3.2%.
Commonwealth Bank of Australia (ASX: CBA) has also lost most of its earlier gains and is trading just 0.1% higher at the time of writing, while Telstra Corporation Ltd (ASX: TLS) has also fallen 3.4%.
Bear markets can be scary even for the most experienced investors. Nobody likes to lose money, especially when it happens as quickly and violently as it has over the last few weeks.
However, it's important to remember that bear markets are every bit as normal as bull markets. It's also important to note that bear markets can provide a great opportunity to pick up some bargains.
When the market is falling, even some of the best companies with the greatest growth prospects or value propositions can get swept up in the panic, and those are the companies you want to be on the lookout for.
