Things to do in a bear market
Mistakes I have done which you should avoid.
1. Buy Great Businesses
Stocks having poor cash flows and high debt will tank a lot in a falling market, thus making it a good choice to buy considering the market state. Its better off to buy cash flow rich companies at an attractive price if you are a beginner. Consider this as your Black Friday sale of stocks.
2. Be Patient
As Warren Buffet quotes “The stock market is a device for transferring money from the impatient to the patient”. Be very patient even if your portfolio is bleeding red and try not to panic sell due to FUD(Fear, Uncertainty and Doubt). This is a very common mistake beginners make, and I was also a victim of this.
3. Leave your emotions at the door
Think logically and do what’s best for your portfolio in the long run. Do not panic sell or buy stocks just because your friends/family/colleagues are on a buying spree.
4. Think about your goals
Think about why you have invested in the market in the first place and what your time horizon is. If it is something for the long term, Sit Tight and relax. If it is something for the short term, try selling off your losers and in the end, stick to your plan and try not to deviate much.
5. DO NOT try to time the market
No one can predict the future trend of the market, so try to buy stocks at regular intervals irrespective of the market conditions. Don’t let greed come your way.
6. This too shall pass
Stock markets are volatile for a reason, and such downtrends have occurred a lot in the past and have also recovered from it. So there is nothing to worry about this.
