What should you do in a Bear Market?
1) Stay Calm – In a stock market bear phase it is easy to get frustrated as stock prices plummet to new lows every week. It is important to stay calm and keep the faith in the markets and the companies that you hold.
2) Weed out the dud stocks – Companies which are weak financially and may not be able to survive an economic downturn which often coincides with a bear market should be sold.
3) Hold tight – Good companies and management often thrive in a bear market. Hold on to those stocks in the portfolio.
4) Rebalance and Diversify – It is important to regularly rebalance the portfolio in terms of equity and debt allocation and diversify as per sector and market caps.
5) Growth vs Value – At every downfall add value stocks. Invest in a staggered manner or in 3 equal parts.
6) Read and Listen – It is important that you read management commentaries and listen to what they are saying during bear markets.
7) Promoter Holding – Strong promoters increase their stake during bear markets. It is often a good indicator of undervalued stocks.
8) Dividend Stocks – Companies that give regular dividends are often available at good dividend yields during bear markets. Investors can watchout for these kinds of stocks.
9) Earnings Earnings Earnings – All said and done markets are a slave of earnings. Track earnings of various companies across sectors. It will act as a good indicator of when the markets will bottom out.
10) Long Term – Keep a long term horizon. History shows that the seeds of a bull market are always sowed in a bear market.
We hope this articles helps you to understand things to be done in a Bear Market. If you need any assistance on Investments, Insurance, Financial Goal Planning or How To Invest In Mutual Funds Feel free to contact Wealth Baba. We will try to help you out in the best possible way.