Bear Market Scenarios
How is running a bear market scenario different than a scenario where the annual returns decline and doesn't Monte Carlo already capture bear markets?
The bear market scenarios allow you to run scenarios where you can control the change in the annual return by each asset class. You can also choose from recent recessions and the program will set the annual returns to the worst one year return (for stocks) during that recession. Bonds will have their annual return changed to what they experienced over that same time frame, which during recessions is usually higher than typical.
It is true that Monte Carlo simulations contain bear markets where the performance of stocks is negative for at least one year. What the bear market scenario allows you to do is set a guaranteed bear market at any point in the future and then Monte Carlo simulations continue on from there in their normal fashion. So it's a way to see how your portfolio and plan hold up if there is definitely going to be a bear market in the near future.