What is a Bear Market?
In general, bear markets are markets in which the prices of securities fall by more than 20% amid widespread negative investor sentiment and fear. It can last from weeks to decades.
So, don’t be so quick to call a market a BEAR.
Things You Should Do During a Bear Market
Always Stay Invested
I’ve said this countless times, and it stays true time and time again. In the long term, you’re always better off staying invested.
And if you’ve been a reader of the site, I would like to assume – like me, you’re a long term investor.
”Wouldn’t it be better to sell off my stocks now and buy when the market bottoms out?”
This is the most frequent question I got during the last few weeks of turbulence. I even came up with a standard reply to copy and paste.
The above theory is sound, but I for one will never know when a market ‘bottoms’ out. And neither would you.
Instead of chasing that bottom, I’d suggest averaging down your stock positions regularly. And when a market rebounds, and trust me it will, you’ll be in prime position for the biggest upside of your life.
Remember the Fundamentals
Don’t panic. Don’t sell. Don’t panic sell.
Remember the reasons you bought into the stock and your portfolio in the first place. During a bear market, the company’s fundamentals will not have changed.
Do not just sell because the stock price is dropping. That goes against conventional wisdom.
What I am Doing
The Freedom Fund isn’t spared the current market downturn. In fact, my return right now is at a measly 0.91%. Since inception.
However, I’ve received and will continue to receive dividends every month. Which is why there’s no panic selling from my side.
Of course, there will always be regrets in hindsight where I wished I had sold stocks earlier so I’d have more money to spend now. But I’m happy where I am – receiving dividends while the market goes crazy.
So this is what I’m actually doing – I’m purchasing stocks and averaging down on my positions. And to continue doing this for the next few months or even years, I’d need cashflow. AND Dividends = Cashflow.
The money I’ve actually saved up in Fixed Deposits and in my savings account will be utilized and used to make more buys.
It is the Best Time to Start Investing
If you’re ever on the fence and wondering if you should start investing, the time is now.
You can read up on how to start investing hERE.
If you’ve yet to open a brokerage account, I’d recommend Rakuten Trade. They offer one of the best rates and you can do everything online right now.
And if you don’t want to invest on your own, I’d suggest a robo-advisor like StashAway.
Now, this isn’t a call for everyone to take up arms and buy, buy, buy.
Instead, I am telling you to keep a calm mind and purchase more stocks if you are able to. Do not go over your risk threshold.
It is also a reminder to always, always stay invested.
Onwards and upwards my friends.