What To Do In A Bear Market To Ensure Wealth In The Next Bull Market

1. What To Do In A Bear Market To Ensure Wealth In The Next Bull Market Understanding how a bear market differs from a bull market might help you prepare for it. A bear market, expressed simply, is one in which stock values have decreased by 20% from the consistent highs of a bull market. Likewise, once the bear market has bottomed out and equities have increased 20%, the market turns bullish once more. The economy has a sudden catastrophe that sends it into recession and sends investors into a generalised panic, which is when the economy transitions from bull to bear. Uncertainty during a crisis escalates into outright terror, which causes investors to panic and sell. For instance, the current 2020 pandemic; the 2008–2009 financial crisis; and the 2000–2002 dot.com bust. Since 1900, there have been 33 bear markets, indicating that they are not unusual. Therefore, it is crucial to be prepared for a bear market when it occurs.

2. It is essential to have a plan in place to handle it. Even better is having a tried and true one. Here are 9 crucial tactics and ideas that can not only help you survive a bear market but maybe even prosper in one: #1 Don’t panic It can actually be a huge mistake to sell just because the market has plummeted into Bear territory. There is no need to sell. Simply remind yourself that the market will always go back up. It always does. History tells us that and history is not about to change. #2 Diversifying your holdings is key The reason? Because having all your “eggs in one basket” is yet another mistake, for any investor. Solid investing and trading are all rooted in having a portfolio and it is called a portfolio for a good reason – you have more than one stock in it! #3 Revert to assets that are recession-proof These include commodities such as gold and silver, food, utilities, government bonds and even… cash. In other words, doing NOTHING is actually a really good strategy in a Bear market, just leave your money where it is for a while! #4 Think long-term The trouble with many who leap into trading and investing is they think they are going to get rich quick. You won’t unless you get exceptionally lucky. Real investing and trading is built on sound knowledge, skill, strategies and understanding that it’s about being patient. When in a Bear market, it’s all about preparing for the next Bull market by being cautious, limiting losses, and taking time to consider probabilities. #5 Go for quality If you are going to invest, one good strategy is to make the most of opportunities that might arise from drops in the prices of the bigger, household-name companies.

3. Believe it or not, they do crop up. You could be having a share of the likes of Apple, Facebook, Amazon… even PayPal and Goldman Sachs! Point is – these are companies that WILL bounce back. Their price will rise. No question. #6 Hedging Being hedged in a Bear market is a bit like having insurance to reduce risk. But this also means you will receive reduced profits. However, hedging is a great way to protect your portfolio because in effect you’re going long and short with the same stock. #7 Build positions over time This is related to quality and long-term thinking since opportunities to acquire a stock more than once will present themselves during a bear market. In other words, you may increase to your stake in that one stock by getting in more than once. If one has quality holdings, increasing their number is a great method to increase the likelihood that they will profit when the market turns bullish once more. #8 Knowing is succeeding It's all about the research here. It's even more important to understand what you are purchasing into during a down market. If you are buying at a bargain and using sound techniques, you are probably well aware of how important it is to research the firm and its track record. #9 Follow proven and profitable trading strategies The VCA approach is what we use at Investment Mastery. Value Cost Averaging is the abbreviation. Our founder came up with this plan, and it has turned out to be quite effective and lucrative. It's one of the tactics we instruct our club members and trading and investing students in.

4. Conclusion: Bear markets do not persist permanently... In order to be ready for the coming bull market, it's a good idea to take a step back, stop, breathe, and take advantage of this lull. BUT... don't let it deter you from investing. In the end, when you acquire equities doesn't matter, says Crestmont Research; what counts is how long you keep them for. They also come to the conclusion that buying reputable, high-quality businesses and cutting-edge ones during a bear market is ideal. At Investment Mastery, we are experts at imparting knowledge about how to cope with various market circumstances. We are quite effective at it, as seen by our client testimonials and our own regularly lucrative portfolios, both of which are shown here. To learn more, why not get in touch?