Outrunning The Bear Market
Can You Deal With The Bear Market?
When the bear is chasing you, it can be difficult to not look over your shoulder to make sure you're maintaining a safe distance. When you're looking over your shoulder, though, you're not looking at where you're going, and you are more likely to trip. If you do trip, any ground you gained while running will quickly be lost! Here's how to safely and wisely manage the bear market circumstances.
Don't Stumble In Front Of The Bear
It may be difficult to imagine applying this allegory to investing, but the same principles apply. Instead of reacting in fear during a bear market, by selling off devalued stocks and waiting to invest until the market recovers (this is akin to looking over your shoulder), a bear market presents the best time to invest.
If you sell off now, you WILL lose money, guaranteed (akin to tripping in front of the oncoming bear), but if you keep your cool, proceed carefully, and make wise decisions, you will come out ahead of the bear in the end.
Taking A Walk In The Woods Can Be Risky
Yes, investing in a bear market is scary. All stock market investments are inherently risky. It is easiest to buy when everyone else is - during a bull market - because predictions are good. Purchases made during a bear market, however, are the real money makers, because they are obtained at low prices and have the opportunity to recover significantly during the next bull market.
Purchases made during the previous bull market, assuming they weren't sold during the market downturn to minimize losses, have less room for growth. Yes, you will probably come out ahead if you're willing to wait out market fluctuations, but you won't be in any position to realize SIGNIFICANT gains.
Take your que from the person in this story - pay attention to where you are going, instead of reacting out of fear. Proceed with caution, and you will not only survive the cycles of the market, you will THRIVE!