If a Bear market is happening what is the only things you can do? Well, nothing. This is the first thing you must consider before entering in the stock market. It doesn’t matter if you are into the Cryptocurrency market or in the classical stock market. The risk is the same and at the end of they day is about money. Here i will share some strategies and thoughts about that undesirable Bear market.
1. Don’t panic
Panic is the last thing you should do. Just don’t! First check the news why the price is going down. See the reason, is it a FUD ? Or just fake news? Or there is something happening with the team behind the crypto you pick? Read carefully.
2. Don’t Sell or Sell Fast
Selling is definitely not the best move but sometimes is the smartest move. Sell for fiat money or just exchange for another cryptocurrency. Of curse if the price is drastically down with about 0.50 $ or more don’t do anything. Just wait for the Bear Market to go away. Strong hand is needed when a price go down and is under consideration for selling.
3. Stop Loss Orders.
To protect a portfolio on the downside, Stop Loss orders may be the answer. It is an order placed below the current price. If the stock falls to that price, it is sold automatically. Very useful option in my opinion!
4. Don’t do Anything.
No really. If you don’t consider your self as professional or experienced trader just don’t do anything. Let it go down, soon or later it will go up again.
5. A Partial Recovery vs Full Recovery.
Know the difference and have patience. Yes, full recovery is pain in the *** but do not forget what Warren Buffet once said: “The stock market is a device for transferring money from the impatience to the patient”.
Analysing previous downturns shows that the market tends to recover half of the value that it has lost relatively quickly, whereas the rest will take far longer.
During the Great Depression, the stock market lost 85 per cent of its value. It gained half of that value back within four years and four months, but took over 21 years to regain its previous highs.
Shorter bear markets also follow this pattern. During the 1970s oil crisis, the market lost 44 per cent of its value. It recovered 50 per cent of this in five months, but took a further 5 years and four months to recover the rest.
6. Value Stocks
Bear markets can provide great opportunities for investors. The trick is to know what you are looking for. Beaten up, battered, underpriced : these are all descriptions of stocks during a bear market. Value investors such as Warren Buffett often view bear markets as buying opportunities because the valuations of good companies get hammered down along with the poor companies and sit at very attractive valuations.
Having a percentage of your portfolio spread among stocks, bonds, cash and alternative assets is the core of diversification. How you slice up your portfolio depends on your risk tolerance, time horizon, goals, etc. Every investor’s situation is different. A proper asset allocation strategy will allow you to avoid the potentially negative effects resulting from placing all your eggs in one basket.
8. Think Forward
For an example: What will happen after the bear market? Don’t just think about the current occasion, think forward.
People should remember that every rally starts when the economy is in recession, not when everything is a bed of roses. Thinking forward or at least trying will help you to decrease the loses and start winning more often.
Having more ideas about the bear market? Share below !:)