How do you avoid a bear market when it comes to investing in stocks or option trading? First of all bear markets, in general, have to be weathered if you’re going to stay in the market and keep spending and making money. However, you don’t necessarily want to be buying bearish stocks. Let’s not confuse bearish stock prices with bullish stocks that have dipped. You need to be able to know how to look at charts and earnings and all that good stuff.
So while you do want to avoid bearish stocks, you do not want to avoid a bearish market, and I will tell you why. The last economic recession represented the greatest buying opportunity in investing of my lifetime. While there were some difficult circumstances for many people, and no one wants a recession, it was an investment opportunity moving forward, still is. In other words, instead of looking at the markets as falling, it was time to consider investing once again.
Look at ten-year charts of blue chip stocks and other companies that have recovered over the past decade after the recession. That being said, when a recession or a bear market for that matter does hit, you don’t necessarily want to be caught off guard. Again, it is hard to know when a bear market is going to hit or a recession for that matter. Therefore, be wise about your investments. Listen to financial analysts, handle your finances wisely in general and make healthy choices. And remember that the dollar cost averaging strategy and buying buy stocks on the dip is always good in term of 401a or 401k plans.
You need a thick skin and a strong stomach to be a successful investor and get the biggest returns. But who ever said doing anything good was easy? Whether that bear market in the best fashion possible, and then move forward investing with a smile about the opportunity.