The Bear Market Survival Guide, Ep #75

Are you prepared for a bear market? The recent drop in the markets has given us all a scare. Does the drop have you worried? Do you even know what a bear market is? On this episode of Financial Symmetry, we clue you in on the tricks for surviving a bear market. You’ll learn just what exactly a bear market is, the questions people typically ask when the markets drop, how to prepare for a bear market, and how to recognize a bargain when you see one. The markets are changing, are you ready for what’s ahead? Listen to this episode to help you weather the storms that bear markets bring.

What do people ask when the markets drop?

When all is going well we feel like we know everything about investing, but when the markets drop everyone starts questioning their investment strategy. People ask themselves, should I be doing something different? Should I be buying? Should I be selling? Should I buy cryptocurrency or should I buy gold? We feel the need to act when we see our nest egg diminishing. The biggest question people have is: what do I need to do to preserve my money? If you feel like you need to sell and go to cash then it means that you are carrying too much risk. Risk tolerance can be thrown out the window when things are going well. It’s when things go bad that shows where your true risk tolerance lies. A poor decision in a bear market can often take years or even decades to recover from. Listen to this episode to help you learn how to make the right decisions in a bear market.

What is a bear market?

A bear market happens when there is a drop of 20% in a particular stock market. It is different than a recession which is when there are 2 consecutive quarters of negative GDP. Many people think that there must be a recession to have a bear market, but this is not true. There doesn’t have to be a recession for there to be a bear market. However, they do tend to work together. There’s about a 50/50 chance of having a bear market coincide with a recession. One thing that is important to remember is that we’re talking about a particular market, not all the markets together. Listen to this episode of Financial Symmetry to find out more about bear markets.

How can you prepare for a bear market?

Bear markets can be scary to watch and unfortunately, the news channels cover them constantly. People pay more attention to bear markets since they are sensationalized by the news media. The most important thing to remember is to follow your strategy. If you feel like you need to get out immediately and go to cash then you are taking too much risk. Unfortunately, we can’t follow our intellect and instinct when it comes to investing. Having a sound investment strategy in place is the best way to prepare for a bear market.

How do you recognize a bargain?

The good thing about bear markets is that it’s the best time to buy. But how do you know when to buy a particular stock? How do you ensure that you are not buying too early? Many people use different charts, indicators, and strategies. Your own strategy depends on your lifestyle. It is important to understand historical context to help you make the best decisions for your money in a bear market. Warren Buffet once said, “widespread fear is your friend as an investor because it serves up bargain purchases. Personal fear is your enemy and it will also be unwarranted.”

Outline of This Episode [2:27] What do people ask when the markets drop? [5:48] What is a bear market in stocks? [10:22] How can you prepare for a bear market? [16:10] How do you recognize a bargain? [20:36] 5 Points to remember in a bear market Resources & People Mentioned Episode 71 - How to Ignore the Stock Market Noise Article - Burned by Bubbles Connect With Chad and Mike https://www.financialsymmetry.com/podcast-archive/ Connect on Twitter @csmithraleigh@TeamFSINC Follow Financial Symmetry on Facebook Subscribe To This Podcast

Apple Podcasts Stitcher Google Play