Bear Market Tips for Investors

Bear Market Tips for Investors

As all of you know that Stock market is cyclical and constantly swings like a pendulum between the two points (Up & Down). The only problem is problem with Investor’s psychology.

Even though all of us know that we have already invested in fundamentally strong companies, we become panic when we see the price of stocks in our portfolio touching the bottom.

This is the common human psychology and an intelligent investor should learn to handle it. Many of my friends invest in the stock market when its all time high hoping that the price will go up further but when it comes down, they become panic and start selling their stocks.

Well, in my opinion one should not exit from his/her stock investments before completion of time horizon or if the fundamentals of the company change.

Say for Example, if you have invested your money in the stock market for the time horizon of say 10 years and after 2 years if the stock prices go down than it is not the sign of exit from that stock. This is because one business cycle is of around 7 years and businesses grow and show gains in their profits during one business cycle and that’s why you MUST hold the stocks for at least one business cycle.

And yes, if you think that the fundamentals of the company are deteriorated than its surely a time to exit.

Otherwise, an Investor should not focus on day to day market fluctuations. Just think that how many times a day you do the valuation of your home? Not even a single time right? You do the valuation of your property every 5 years or maximum once a year right? Than why you check the valuations of your stocks on the daily basis?

It will gain nothing except the stress. In fact, bear market is the opportunity to buy the stocks of fundamentally strong companies at low valuations. Bear market means SALE in the stock market and you should take advantage of this SALE.

So don’t panic of bear market and stay invested even during the bear market.