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5 Lessons To Remember During Bear Markets

5 Lessons To Remember During Bear Markets

July 04, 2022

Remaining Balanced Can Pay Off

Bear markets are uncomfortable. Having a strategy and maintaining perspective are essential for long-term financial success. Here are five investing lessons past markets taught us.

  1. Periods of falling prices are a common part of investing in the stock market.
  2. An investment’s value will be greatly influenced by fundamental factors, such as profit and revenue growth.
  3. Diversification, while it does not assure against market loss, often provides the safest haven against the ebb and flow of changing markets.
  4. Invest over time, rather than make single lump-sum purchases. In other words, falling stock prices are the friends of dollar cost averaging investors (of course dollar cost averaging cannot guarantee a profit or protect against a loss in a declining market).
  5. Take a long-term view when investing in the stock market. Short-term fluctuations are natural. (The investment price and underlying business often have little to do with each other over the short term.)

Planning Matters

Remember that you’ll be inundated with all kinds of economic information during both bear and bull markets. There will be reports about inflation, interest rates, and unemployment figures that may entice you to either give up on the stock market or invest in it to the exclusion of investments paying relatively smaller returns. To avoid being lured to either extreme, develop a financial strategy that accounts for risks you find comfortable. Review your investments on a regular basis to help ensure they are still relevant to your overall financial plan, and that you’re staying on track. Then trust yourself and stick with the plan.


Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

Past performance is no guarantee of future results.

This article was prepared by FMeX.

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