Bear Market: Your Chance to Create Serious Wealth With 2 Growth Stocks (2024)

FAQs

How do you build wealth in a bear market? ›

But you can maximise your chances of a profit in a bear market by following bearish-friendly strategies. These include diversifying your holdings, focusing on the long-term, taking a short-selling position, trading in 'safe haven' assets and buying at the bottom. Can you lose money during a bear market?

Defensive stock sectors including consumer staples, utilities, and health care tend to outperform during bear markets. Government bonds offer important diversification benefits and the potential of strong returns in a recession.

Investors become pessimistic during a bear market and will avoid buying shares as their equities may start decreasing in value. Prices will drop which can make buying appear appealing, but it can be risky. But depending on your financial plan, it may be worth investing in.

What is the best strategy in a bear market? A potential strategy in a bear market (or any market) is to buy and hold stocks from major index funds like the S&P 500. Data from Crestmont Research shows that S&P 500 returns in any 20-year period from 1919 to 2022 were positive.

Investing in bonds is also a common strategy to protect oneself during a bear market. Bond prices often move inversely to stock prices, and if stocks decline, a bond investor could stand to benefit. Short-term bonds in a bear market could help investors weather the (hopefully) short-term downturn.

If you have a balanced, diversified portfolio that includes assets such as government bonds, defensive stocks, and cash, as well as equities, you shouldn't need to sell during a bear market.

The duration of bear markets can vary, but on average, they last approximately 289 days, equivalent to around nine and a half months. It's important to note that there's no way to predict the timing of a bear market with complete certainty, and history shows that the average bear market length can vary significantly.

Treasurys are generally considered "risk-free" since the federal government guarantees them and has never (yet) defaulted. These government bonds are often best for investors seeking a safe haven for their money, particularly during volatile market periods. They offer high liquidity due to an active secondary market.

The S&P 500 soared throughout the year and finally reached a new high in January 2024, making the new bull market official.

While there is no one-size-fits-all number when it comes to how much cash investors should hold, financial advisors typically recommend having enough money to cover three to six months of expenses readily available.

What is the longest bear market in history? ›

The longest bear market lingered for three years, from 1946 to 1949. Taking the past 12 bear markets into consideration, the average length of a bear market is about 14 months. How bad has the average bear been? The shallowest bear market loss took place in 1990, when the S&P 500 lost around 20%.

The way you make money from stocks is by the selling them at a higher price than you bought them. For instance, if you bought a share of Apple stock at $200 and sold it when it reached $300, you would have made $100 (minus any taxes you'd have to pay on the money you made).

Keep investing consistently.

By investing a fixed amount of money at regular intervals regardless of market conditions, you're more likely to be able to purchase equities at more affordable prices and potentially see the shares rise in value once the market rebounds.

Selling off all your stocks after seeing red in your portfolio during a bear market is the last thing you want to do. Volatility is scary, especially if you are risk averse, but running with the volatility wave is key and beneficial to the success of your long-term portfolio.