A bear market can be referred to as the situation in the market, where decline of atleast 20% of the stock prices or so and overall negative sentiment persists in the market.
Bear market is really tough time for the share market investors. It is this time, the investors learn best lessons in the market. Surving a bear market is as good as earning profits in bull market.
Let’s discuss some facts on how to survive a bear market.
If you are a share market investor, then you should understand that bull market & bear markets are part of business cycle. Both existed in the past, existing in the present and surely exist in the future. Learn lessons from the past.
When markets are on steady growth for 4 to 5 years, you should able to sniff the smell of possible upcoming bear cycle. Don’t be fooled by advices of analysts and brokers. If you could remember, many said when the sensex is at 21,000, it could reach 30,000 or so. If it really reached 30,000 then they predict next target is 40,000 or more. Even we can’t blame them since it is their profession and they will make more profit in bull markets than bear market. So everytime they keep on say bull market this time is different and long lasting.
Don’t believe, read & re-read the history of stock markets till you convince that no bull or bear market is long lasting and one follows the other and it is inevitable.
It is always better to sell your stocks when you sniff the bear sentiment at the peak of bull markets. We agree, it is hard to time the market but it is your common sense that decides the fate of your investments. If you don’t have any holding when the markets are falling, keep quiet and don’t trak the markets till they stabilize.
When markets stabilize in bear sentiment study the economic conditions and start investing in value scrips(don’t be fooled by comparing the high and low prices of stocks) and forget them. Definetely your time comes. Based on the prevailing economic conditions the bear markets may last from 2 to 4 years if not more. You need patience to become another Rakesh Junjunwala.
Please understand, investment is an art not a science. “Science” gives result based on how you apply pre-existing laws & formuals. But “Art” has no formuals to get the result. It is a common sence, creativity and requires your attention !!
Mohan Bhupathiraju
Mohan Bhupathiraju is a co-founder & editor at LastBull.com. Handled multiple projects in BFSI for few of the Forbes top 100 companies. He works in IT industry in the US. Presently working on start up Ideas in Finance & Technology niches.
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