Investment Advice on Stocks in a Bear Market

Many people are saying that a bear market lies ahead and others are wondering whether they are already in it. As per statistics, till S&P INDEX 500 falls by twenty percent or more from the peak that it reached in May 2015, it cannot be officially declared. Of course, by then all would be going downhill and more.

Secular trends

As per market experts, secular bull and bear trends exist. The last bear trend ended in 2009 and a new trend in bearish market conditions has already begun. Hence, people need to be aware that a bear market risk is imminent. For investors who are looking for investment advice, they need to stay on the course and not make any panic decisions. Though it is seen that people in their fifties or more have about seventy percent of money in stocks, it is necessary not to panic but to reduce risks as much as possible.

Keeping it simple

With ETFs in the limelight, many investors might think that they are the best, but one needs to judge from a different perspective. At such a time, it is best that one does not own any volatile funds or multi leveraged index ETFs. It is best to dump such funds as a bear market scenario is evident.

Spring cleaning of your portfolio

My investors often have stocks of companies or ventures that they feel have the potential to provide great gains, but have not shown any performance till now. This could be a business in China that is yet to show profits or a promising entrepreneur’s venture that has not performed as promised. Many investors have such stocks in their portfolios. It is necessary to sell these losing stocks and not think of holding onto them.


Reduce stock holdings

In a bear market it makes sense to reduce your stock holdings and have cash instead. When you have enough cash to cover expenses for three years or more, you will be able to own stock again. It is best to stock up on cash instead of stocks at this time, besides the ones that have been consistent so far.

Increase defensive holdings

Core funds like US or international index funds can be staple items in a stock portfolio that need not be removed in bear market conditions. You could even consider moving the money into sectors that have done well over time like utilities, health care, consumer staples and telecoms.

Bonds can be held onto

Even if emerging company bonds or high yield corporate bonds might not make sense, holding onto bonds of entities like municipalities would be sound investment instruments to hold onto. Treasury bonds can be held on as well, even when a recession descends. More advice on “Mistakes You should Avoid when Investing” matters can be found in the Article Mentioned Here . Beyond taking these steps, one should not worry much about the financial markets and take the time off to sleep more and spend time with family and friends. Recession or bear market might be times when you need to take your attention off the stock market and enjoy life.

Leave a Reply