Surviving the Bear Market

Surviving the bear market isn’t easy. When you see market prices going down by 15% to 20%, it’s simply overwhelming and you start panicking. However, there are some ways through which you can survive and even beat the bear market. The following are the investment strategies you can use to remain cool as the market goes wild with bears. 

Understand and Check Your Fears 

Time and time again, the market proves its worries to be unwarranted or outright wrong. Of course, it’s not bad to be fearful of the risks of losing all of your investments. However, you have to keep them in check. 

Through the years, the markets have experienced economic woes and ups and downs. But over time, they surpassed such challenges and continue to grind and hustle. 

What this teaches you is you should know when your fear is rational and when it isn’t. Sometimes, your worries might look like a huge asteroid hitting your world. But in reality, it’s just a tiny pebble in a bedrock of adventure. 

Average Down 

Also, remember it’s normal for the markets to slowdown during unstable economic conditions. Having a negative year is part of the journey. 

So, if you consider yourself a long-term investor, take advantage of the dollar-cost averaging. This way, you are investing the same amount of money regardless of the market trajectory. 

That means you buy more shares when the price is declining, and you buy fewer ones when the price is up. 

Over the longer term, your cost will average down and you have a better overall entry price for your shares. 

Don’t Move; Don’t Do Anything

It’s bear market and the bears are winning. Bulls don’t stand a chance. And what do you do when you meet a bear? You do nothing. Playing dead sometimes is the best way to stay alive. 

If you fight back, it would be very dangerous.

Put a bigger chunk of your portfolio in money market securities, like certificates of deposits (CDs), US Treasury bills, and other instruments with high liquidity and short-term maturities. 

Always Diversify 

In the investing world, it’s a mortal sin to not diversify. Spread your portfolio among stocks, bonds, cash, and alternative assets.

You have to consider your risk tolerance, goals, time horizon, etc. 

Don’t expect your situation to be the same as the next-door investor. Use a proper asset allocation strategy allowing you to avoid the potentially negative effects of putting all your eggs in one basket. 

Be Ready to Lose Some

This is another way of saying you should invest only that which you can afford to lose. You have to invest money that’s not allocated on other important things like rent, bills, mortgages, etc. 

Because if you use the money intended for those and you lose it, you’re risking your way of life and even the future of your family. 

In bear markets, even the smallest corrections can do a number on your portfolio. So, make sure you can lose whatever’s in that portfolio. 

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