Investing in a Bear Market

Investing in a bear market can be scary. Anxiety, concern and fear are normal to feel. Negative outlooks often accompany bear markets, such as increasing inflation, interest rates and the possibility of a recession.

The temptation to sell your investments transforms a temporary market selloff into a permanent loss for your portfolio. At times like these, maintaining the proper perspective is crucial.

Maintain a Disciplined Perspective

Warren Buffett is full of wise advice and perspectives. The following philosophy is especially timely:

“The market is a device for transferring money from the impatient to the patient.” 

That is what is happening right now. And historically, patient investors have been well rewarded.

For instance, since the pandemic hit, markets have returned 44%. That includes the 35% Corona Crash and the current bear market losses (over 20% to date).

Stock investors saw their portfolios drop by over 50% in the Global Financial Crisis. Yet, those who hung in there have earned 221%, even after the current bear market loss.

Developing Patience

Patience is both a virtue and one of the most remarkable skills investors can develop. The challenge is that patience can deplete over time. Let’s talk about perspectives and strategies if you feel your patience dwindling. Remembering your financial plan and goals can help you refuel your tank and make the most of the opportunities ahead.

©2022 The Behavioral Finance Network

S&P 500 Index through Sept 23, 2022, and include reinvestment of dividends. Performance calculated at https://dqydj.com/sp-500-return-calculator/. Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. All indices are unmanaged and may not be invested into directly.

Main Takeaways:

1. Bear markets are not easy to invest in. Feelings of anxiety and fear are commonplace and completely normal.

2. Negative news, declining values, and pessimistic outlooks can influence investors to sell low, transforming a temporary market selloff into a permanent loss for their portfolio.

3. Maintaining good perspectives is very helpful. Warren Buffett teaches us that markets transfer money from the impatient to the patient.

4. Being patient historically has paid off handsomely. Investors that were able to hang in there through three-year Global Financial Crisis have been handsomely rewarded to the tune of 220%…even after accounting for this year’s losses.

Learn More with Clarity

Our advisors can help you better understand your relationship with money – and create a plan for the future. Click here to schedule a consultation with Clarity Wealth today.