Bear markets are an investor’s best friend. During big dips in the stock market, you have a better chance of building a significant lead over indexed investors. If your goal is to beat the market in the long run, bear markets play an important role, he writes. Market Watch.
When the market goes down, of course, your odds of losing money will be high. But “beating the market” is relative, not absolute.
In theory, it is naturally easier to add value during a bear market. This is because you weigh the lower risk stocks or other asset classes that cause your portfolio to lose less than the market itself.
Under beef markets, these would be lower-risk stocks or alternative asset classes usually after the market.
The data shows that more than twice as many people beat the market during a bear market, as during the beef market, according to Marketwatch.
Follow your plan
During a bear market, sticking to one’s plan is more important than ever. This can be difficult, because in bear markets you are more likely to lose money even if you beat the market yourself. So you will be tempted to change your strategy or even throw in the towel.
If you give up, your long-term prospects of getting into the market will be much lower.
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