What are the Best Bear Market Investing Strategies?

Short Answer

A bear market is the tendency of the financial market to take a negative turn for a long period of time, typically at least 2 months. The market experienced a general drop in prices for at least 20% from previous highs over at least 2 months.

Detailed Answer

Bear market hurt and are the dreariest time. Even the most level-headed person knows how daunting it can be. It is during those times of market plunge that your patience, understanding and self-restraint are tried and tested. You are tempted beyond measures to succumb to the pressures and pessimism. However, witnessing a bear market doesn’t have to be all bad and negative. Learn how to adapt, survive and thrive with these investing strategies.

A bear market is always accompanied by high investor optimism, widespread fear and panic. It can also follow financial downturns and economic recession.

5 Ways to invest in a Bear Market

Here are investing strategies that can help you sail through even the toughest bear market:

1. Invest in Blue-Chip Stocks

Blue-chip companies rank among the world’s biggest companies. They are industry leaders with large market caps, which makes it difficult to unseat them. Although they aren’t immune to tough market times, they have a long-standing reputation of always getting back on their feet. Since they are less sensitive to market fluctuations, investing in these stocks is a way to protect the investment portfolio.

2. Use Dollar-Cost Averaging

In a bear market, most investors are panicking and assets are underpriced. How about using that time to buy assets or stocks at a low point and sell at a higher point when the market recovers. With dollar-cost averaging, you continue to invest regardless of the market and even score the best deals.

3. Diversify to Reduce Portfolio Risk

A portfolio that comprises of different kinds of assets can lower the risk of any individual holdings. There should be a mix of bonds, treasury bills, stocks, ETFs, mutual funds, 401(k) and other assets.

For instance, if you put all your money in stocks, you might lose it all if the stock market crashes. However, diversification can help you reduce risk during the market plunge. By not putting all your eggs in one basket, you shield yourself from any crisis.

4. Discover Assets that Appreciate in Value

If there is anything the COVID-19 crisis has taught us, it’s that some industries tend to fare well even when others are experiencing their worst. Consumer goods, IT, cybersecurity, pharmaceutical companies are an example of assets that tend to perform well even during economic downturns.

5. Look at the Long Term

One thing is the bear market is inevitable. But the good news is they never last forever. In fact, they don’t stay as long as a bull market. Hence, have a long-term investment horizon and simply hold on till the market bounces back to normalcy.

Bearish Market - A Final Take

A bear market might not be bad after all, if you have the right investing strategies in your arsenal to weather the storm.

Tagged With: bear marketbearish marketbera market investing strategiesstock market
Ask your query and our expert community would be happy to help
Discussion (0)
Related FAQs

What are good or best stock market books for beginners?

There are plenty of books such as "Everything you wanted to know about stock market investing", "Stock to Riches: By Parag Parikh", "The Intelligent Investor: By Benjamin Graham (This one tops the list of best-investing books)" and many more.

Are healthcare stocks the new best investment for significant returns?

Healthcare stocks are quite beneficial in the given day and age, all thanks to its impact on the country. They have grown in the evaluation and even providing considerable returns that nobody would have predicted. Therefore, research the stocks that you wish to invest in in the long term and see how it pans out over 10-20 years.

Is it a good time to invest in stocks? Bullish Stock Market

There are several questions that one can ask your advisor. These questions include whether its good time to enter or exit the market? Should in exit from debt and move to FD? do I continue my SIP portfolio? and other such questions.

Can NRI invest in Indian stock market?

Yes, NRIs can invest in Indian stock market. It is essential for the individual to check if he is considered as NRI or not according to the norms of the government. If yes, only then he can invest. There are also certain rules and regulations that must be followed.

What are important things to keep in mind for stock market beginners?

For any beginner who is getting started in the stock market, you need to be aware of the broker you choose, the investment strategy, not letting emotions play in your investment and trading desires, and not trading with money that you can’t afford to lose.

Which is Best Intraday Tips App for Indian Stock Market?

Making money off the stock market is no easy feat. It would help if you had a calculated investment while reading the stock market and ensuring that you have all the metrics checked out for making a sensible investment.

How to determine a bull market or a bear market?

Bull markets are identified when the stock sees a rally in its price, increasing, and there are lesser chances of it crashing. Conversely, a Bearish market is when the stock market plunges, and the stocks lose its value due to several reasons affecting its performance. Mostly the color green on a stock market chart is bullish, and the color red is bearish. However, these are prolonged over a couple of days to determine the nature of the market.

What is the best way to hedge your investment portfolio?

Hedging your portfolio is important if you want to generate consistent long-term returns on your capital. Some of the classic methods to hedge your capital are to diversify, modify your asset allocation according to market cycles, and use derivative instruments like futures and options to hedge your portfolio.

Can I trade or invest Rs 100 in the share market of India?

You can definitely trade or invest Rs 100 in Indian stock markets. There are no monetary requirements to enter the stock market hence you can buy any share that is trading under Rs 100. Apart from direct stock investing/ trading, there are some indirect ways to own shares over Rs 100. This can be done through Mutual Funds.

If you had one crore rupees, which stocks would you recommend investing in?

There are many stocks of companies that could be invested in. For example, companies doing good in the FMCG sector, Healthcare sector, Banking sector, Consumer product sector could be invested in. these are just a few as plenty other companies could be invested in based on your requirements and strategy for investing.