Bear Markets

Stock Markets can be wildly volatile along the way. It’s not unusual for the market to fall 20% to 50% every few years. On average, the market is down about one in every four years. A bear market means prices are dropping at a rate of over 20% over the short term. Historically, bear markets have happened every three to five years on average but the gap between bear markets and bull markets (Bull Markets) is getting longer in modern times

In the 14 bear markets in the United States, over the last 70 years. They varied widely in duration, from a month and a half (45 days) to nearly 2 years (694 days). On average, they last about a year. In reality, none of us knows when a bear market will come, how bad it will be, or how long it will last. you need to be positioned conservatively enough with some income set aside, so that you won’t be forced to sell while stocks are down. Have a percentage of (low) income producing investments (bonds etc.) that you can sell in a bear market and buy bargain price stocks (indexes).

The most successful investors take advantage of all that fear and gloom, using Effective Money Management in these tumultuous periods as **an opportunity to invest at bargain prices to create more Diversified Returns “The best opportunities come in times of maximum pessimism.”

A word of warning, dont get too excited and forget about the fees. 90% of surviving a bear market comes down to preparation. Bear markets are here to serve you. If you keep your cool, they will accelerate your journey to financial freedom. If you find internal certainty, you’ll actually be excited when the market crashes.

Bear markets are likely to continue happening every few years, whether we like it or not. Winter is coming. Get used to it and prepare. They’re no walk in the park.

“How do I feel when the market goes down 50%? Honestly, I feel miserable. I get knots in my stomach. So what do I do? I get out a couple of my books on ‘staying the course’ and reread them!” –Jack Bogle

Bear Markets Become Bull Markets, and Pessimism Becomes Optimism

  • Stock Markets
  • Bull Markets
    • Every ber market (Bear Markets) in history has eventually become a bull market, regardless of how bleak the news seemed at the time.
  • Corrections
    • Fewer than one in five corrections escalate to the point where they become a bear market. Bear Markets
  • Index Funds
  • A Customized Approach to Asset Allocation
    • Always Have a Cushion. You never want to be in a position where you’re forced to sell your stock market investments at the worst moment. So it makes sense to maintain a financial cushion, if at all possible. Collect an appropriate amount of income-producing investments such as Bonds, REITs, MLPs, and dividend-paying stocks. Diversify broadly within these asset classes. If your stocks crash, you can sell some of those income-producing investments (ideally bonds, since they are liquid) and use the proceeds to invest in the stock market at low prices. (This puts us in a strong position where we can view the Bear Markets as a friend rather than a fearsome enemy.