Since the outbreak of the new crown epidemic, major banks around the world began to release large amounts of currency leading to a bear market, which has greatly reduced investment yields and left many investors wondering how to maneuver, a major test for investors.
Bear markets are not scary, but rather an opportunity. The bear market brings a decline that should be approached with a different mindset. The most successful investors know that a bear market is a good opportunity. According to information, bear markets occur on average once every 5.4 years, and they are much shorter than bull markets. For long-term investors, although they need to wait for a certain amount of time, this is the time when you can buy the right stocks at even lower prices. If you use the right investment strategy in a bear market, then how painful the bear market is in the short term, then how bullish it may become in the future.
A 4-point investment strategy for bear markets. While there is nothing overall that you can expect to make a quick profit in a bear market, the right investment strategy will give you great benefits in the long run.
(1) Stick to a long-term investment plan
As a smart investor, it is important to always stick to your long-term investment plan, whether it is a bear market or a bull market, especially in a bear market where short-term investments may cause huge losses due to a crash. During a bear market, try to avoid yourself from being influenced by cluttered and useless negative information, and focus on studying the returns of long-term investments to reduce the risk of losing assets through time.
(2) Avoid exiting the market outright
Ordinary people often imagine that they can reduce their losses by selling all their stocks during a bear market, but often the result is that they are unable to maximize the return on their assets. Selling stocks at the highest point and buying again at the lowest point may seem simple, but it is also the most difficult to manipulate. Even if one is lucky enough to sell at the highest point, it is difficult for the investor to find the right time to enter because the market usually rises suddenly at a time when everyone is not optimistic. Therefore investors should use regular fixed-term investments in more solid stocks.
(3) Don't guess the highest and lowest points
In a bear market, the average person always feels that he or she can guess the exact highs and lows and assess the best time to enter and exit the stock market, but it is often found to be wrong through several time proves. Therefore, if you want to sell a portion of your shares in a bear market, it is wiser to use a split sale.
(4) Finding potential stocks for investment
During a bear market is the best time to look for stocks with growth potential. Investors should focus on finding companies with stock prices below the actual company value, with stable cash flows, healthy balance sheets, and still have the ability to price in an inflationary environment in aggregate.
Overall, the investment strategies and thinking described above should be used during a bear market to reduce losses while earning profits over the long term with a stable mindset and a long-term perspective.
