Many people are worried about the Bear Market and are scared to buy stocks. Therefore I will help you become richer than most people when the Bearmarket stops. Invest in the Bear Market! Bear Market meaning: A large index that goes down by 20%
You should not panic and sell all your stocks. I guarantee that the people who sell all their stocks are going to buy them back for a more expensive price. According to the article The Ultimate Guide to Bull Markets, the average Bull Market lasts 9.6 months and the average gain during a Bull Market is 112%. Why are people buying stocks like crazy when it is a Bull Market? The answer is that they are being influenced by the experts, the people who represent the FED, and their friends. They also behave like inexperienced investors when they think that a Bull Market will never crash and panic when the Bearmarket returns. Stay the course and keep your stocks!
If you are extremely worried about the Stock Market and you don’t want to buy any more stocks until the Bull Market returns I suggest you invest in funds. Funds are perfect for you because you don’t have to do any research and you leave the research to the people who buy stocks for the fund. You are guaranteed to make money, but it will take longer than making money from individual stocks. This is because you own a small percentage of the shares that the fund owns unless you invest loads of money.
When you want to maximize your chances of making money and at the same time minimize your risk you should diversify your portfolio. In the article Why diversification matters It is demonstrated that the riskiest portfolio containing 60% Us stocks, 25% international stocks, and 15% bonds had an annual return on average of 9,77%. Its all-time high return was 136% and its all-time low was a loss of 61%. For most investors who have trouble handling red days, this wouldn’t be a good option at all. Therefore a portfolio that is diversified can help investors calm down and sleep a bit easier.
Bear and Bull are the two words that are at the epicenter of most investors’ lips. Bear Markets are linked to economic difficulty and poor investing times. Bull Markets are linked to opportunity and a period of economic prosperity. A problem many unseasoned investors and long time investors face is that they are unable to adapt to a Bear Market. This is because they don’t use investment principles like don’t spend all your capital, avoid jumping on the bandwagon and don’t listen to the experts. The solution to their problems is learning to adapt to the two different markets. Cristiano Ronaldo wouldn’t be such a good football player if he couldn’t shoot with his left foot!
Adapting to a Bear Market is pretty straightforward. Firstly you should start spending more of your capital and buying shares at a discounted price. You should also buy positions in funds, because their minimum limit to how much money you need to deposit will be lower than during a Bull Market. However you should also not go completely berserk spending your entire capital on shares that is a lesson I learned the hard way. During Bear Markets you should also spend less energy on identifying penny stocks, because when the already successful companies like Apple, Paypal and Amazons stocks are discounted you should buy them.
Bull Markets are a different ball game and you should elect to spend your capital more wisely. Most stocks at this time are overvalued and this is the most dangerous time to jump on the hype train. Many of your friends and acquaintances will just have started investing. They will recommend what stocks you should buy and encourage you to spend most of your capital. However the question you should ask them is where they were during the previous Bear Market? At this time you should shut out the noise from the experts, friends and relatives. At the same time you should allocate more time to researching stocks than during a Bear Market, because the stocks are overvalued as a result of the high demand. Moreover when a stock drops significantly in price it is more attractive to pounce during a Bull Market for the reason that you will probably be able to reap the rewards faster.
Dividend stocks are perfect to buy during a Bear Market, because no matter what happens to the stock price you will get regular dividend payouts. Ideally you want to buy cheap dividend stocks that also payout a high dividend per share. For example Lumen, Coca-Cola and Bank of America are three great dividend stocks to purchase. Always make sure to have dividend stocks in your portfolio if you are worried about the impact of a Bearmarket. You make most of your money in a Bear Market!
Most people who fail to attain significant gains during a Bearmakret can’t control their emotions. If you get scared every time you log into your portfolio, because you see the color red practice not opening your portfolio for days on end. Or spend less time monitoring the stock market. Minimize notifications and updates both concerning your portfolio and from news outlets. Practice not giving into your panic selling habits that always ruined your progress. Emotions are the enemy of making money. For example you don’t want to buy a certain stock, because you don’t like what the company does, but then get upset as overs made money by purchasing that stock.
Now you know how to make money in a Bear Market and how to better adapt yourself to different markets without much trouble. You make the most of your money in a bear market quote : “You make the most of your money in a bear market you just don’t ‘’ realize it at the time”. Shelby Cullom Davis
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