How To Invest In A Bear Market


And with that close the S&P 500 falling into bear market territory, officially now down 20%. Contrary to popular belief, bull markets do not last forever. Now we have seen in the past, when markets do reach that 20% decline, what usually follows is a total 30% decline. And it can take up to two years on average for markets to actually get back to their original values and start moving higher. That’s the bad news. The good news is that bear markets also do come to a close and there are things that you can do to protect yourselves during a bear market decline. And in fact even make some money while it’s happening. Now the most important thing, lesson number one: is do not panic. That’s the worst thing that you can do is chase the market lower. You’re going to lock in losses and you’re going to regret it later. What you can do is you can strategically take some risk off the table and raise some cash. Cash, for the first time in a decade, gives you some return. A three-month Treasury note actually has yield now. So does the money market. So does even a plain vanilla savings account. So what’s the advantage of raising cash during this time? So you have opportunities later. You can buy things that are on sale during a bear market and make some great investments for value. You want to talk about value? Let’s talk about Warren Buffett. Back in 2009, when everybody else was panicking, Buffett made a big investment in the Burlington Northern Santa Fe Railroad. And I just basically believe this country will prosper and they’ll have more people moving more goods 10 and 20 and 30 years from now. And the rail should benefit but it’s a bet on the country basically. He believed in America back then. And he also believed that the bear market was going to end and when it did end there was going to be a bounce back and an opportunity to make money. That bet played out into one of the best parts of Warren Buffett’s career. He has made a ton of money on that over the past decade. Buffett’s philosophy can be summed up in just looking for value during bad times and trusting that things are going to turn back around again. Remember what Buffett says: “Be greedy when others are fearful and fearful when others are greedy.” Think safe havens during these times. Short-term bonds, commodities like gold and silver. Those are all traditional places where investors will put their money for safety during times of turmoil in the financial markets. If you are going to dabble in stocks keep a few things in mind. High dividend stocks are an excellent place to put money. Why? Because you’re getting paid to hold them. Also preferred shares along the same lines. And if something does happen with the company you get paid. In a bear market people are tightening their belts, so think about where they’re going. They’re going to discount stores. They’re going to Walmart. They’re going to Dollar General. Back during the crisis while the rest of the market was falling apart, Walmart held its value. Why?That’s where people were shopping during that downtime and investors were rewarded for it. Real estate also can be a solid investment during these times. Yes prices can go down, but they’ve shown to be less volatile over time. Also it’s nice to know that even if it’s not appreciated in value, you can actually live there. Remember, it’s not just the U.S. stock market it’s a global stock market and over the past couple of years global stocks have gotten beaten up fairly badly. So that’s going to present you with an opportunity to find bargains there as well. No one knows how long a bear market can last or how strong it can get, but there are ways for you as an investor to make your way through it.

67 Replies to “How To Invest In A Bear Market”

  1. "Contrary to popular beliefs, bull markets do not last forever"…

    Wow.. thanks for that information! I didn't know that!

  2. If all Warren Buffett cared about was money he’d sue all of you using his image as thumbnails to make it look like there’s a new WB interview, when there isn’t.

  3. play inverse tickers.. TVIX, TZA, SQQQ, etc. They are inverse of $DJI. Study the patterns. You can make some good money

  4. So we should raise cash now that stocks are down 20 % ? So we can buy when stocks are down 30%. Good luck with that. And where were you BEFORE stocks went down?

  5. I would suggest for Mr. Buffet to try and survive an Egyptian prison or concentration camp in the desert or 10 years of witch hunting and illegal gang stalking…

    Not a bear market….
    Those so called investors are spoiled rats with no real life experience….life is never fair is it…

  6. That is, if you get out of the stocks before they reach the bottom, or better yet, before they started to dive.

  7. Wonder why Bear Market is so called? Because bears grab prey by pushing its paws down.

    In contrast, Bull Market refers to the fact that bulls horn upwards.

  8. Funny how it’s easy for someone to tell you to sell so you can buy back cheaper and show warren buffet. But he never gives this bs advice.

  9. This guy is exactly wrong. He says buy gold during bear markets. No, average down on index stocks. Bear markets are when stocks are on sale

  10. What goes up must come down. Physics 101

    Time to quit being lazy suckers extracting wealth and being leechers and start inventing

  11. It's all about to come crashing down as they flash the warning signs in your faces. Start practicing your jump now and please don't do it where people are walking below.

  12. Looks like these guys don't know any more than average folks; if they did they'd say when to sell so you'd have the cash when it's time to buy.

  13. Market still needs to drop more, Trumps government shut down should get the ball rolling. Mexico still won’t pay for the wall, so punish Americans, thanks Donald.

  14. I see this as more of a price correct due to interest rates than us heading into recession. Think we are going to be flat to interest rates stop rising.

  15. Just short an index that tracks how often CNBC reports factual news. It's a method that works in every type of market and just keeps getting more profitable each day.

  16. Brandt Hackney has been talking about this bear market coming for months now. I just watched a great video he did on finding those opportunities in this bear market using bull and bear flags and found it very very helpful in understanding this. https://youtu.be/f4qw8W3VMOc

  17. Once in s blue moon the words will become be greedy when others are not and be fearful when others are not

  18. Iam not a native english speaker, and took me time to realize what is a "bear" market… I thought it was a market that sell bears XD

  19. Be fearful when everyone’s greedy and be greedy when everyone’s fearful…except that doesn’t work when Enron was tanking and everyone was being fearful…and it doesn’t work when everyone was being greedy with Apple and Amazon surpassing the 300, 500M market cap milestone… those companies just kept soaring. Very flawed logic.

  20. Just what does he mean by "raising cash"? Does he mean to sell your current stocks & get into bonds, CDs, & Money Market funds and "So you have opportunities later. You can buy things that are on sale during a bear market and make some great investment value."? Isn't that same as timing the market? lol So, he's not into buy & hold and ride out the storm. That's the 50 billion dollar question! If you are up, do you sell and take the gain & get taxed on it and use the cash & buy when the stocks are way down in the future. Or, do you hold onto your stocks and ride it out? He talks about hedging by buying bonds, CD, etc…but what if all your money is tied up in the stocks?

  21. The only quote you'll ever need to hear the stock market is from Warren Buffett who said "I don't know when to buy stocks, but I know whether to buy stocks." Once you have enough cash saved up to live life where you never have to worry about going paycheck to paycheck (I'm talking a relatively substantial amount, like $50k or more) you should invest in a portfolio of index fund type securities on a regular basis regardless of the price.

  22. Reccision isn't going to happen till early 2020 at the earliest housing is going to flop but the tech and medical sectors will be just fine you're welcome and telsa is about to have a huge dip js

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