We have talked about the bear and bull market in my earlier article. Now let’s look at what you, as a savvy investor, should be doing when the market takes a turn for the worse and things just seem to keep going south.
So typically in a bear market, you will be seeing these traits: Weak Investor Confidence, Slower GDP Growth, Declining Corporate Earnings, Low Employment Rate and Lowering Of Interest Rates.
Before you start bailing and pull all your money out of your portfolio, calm down and have a think. Instead of panicking about how the market downturn will impact you, think about how this can present good opportunities for your portfolio in the long-term. After all, the cycle will correct itself so what you need to do is to be patient and wait for the recovery. In fact, since World War II, periods of economic expansion have lasted longer than contractions. The average expansion has run about 65 months, while recessions have lasted about 11 months, according to the National Bureau of Economic Research.
Still feeling afraid? Here are three strategies to run through with your trusted financial consultant:
1. Dollar-cost averaging:
By putting your money in regular periodic investments, it can help take the emotions out of your investing decisions, likely proving to be more effective in the long run.
2. Hunting for value:
A lot of stocks may have seemed overpriced and too expensive to buy in while the bull market was raging. Now is your chance to find quality companies at fairer prices.
3. Look for dividends:
Dividend-paying stocks can help to hedge against inflation; tend to be less volatile and may pay investors a better overall return even during tumultuous markets.
So remember, it is true that we have to learn how to see the silver lining in every dark cloud. Better still, always be well prepared with everything you need to weather the elements. And for that, speaking with someone who has the experience and expertise to advise you would be the most ideal solution. Connect with me today.