In September 2021, my wife, my daughter, and I visited Glacier National Park. We were eager to experience the sweeping mountain landscapes, impressive glaciers, and bucket list hikes this park is known for. With over 700 miles of trails in Glacier, you can’t go wrong hiking here – unless, that is, you come face-to-face with a grizzly bear. Bear attacks are rare, but when they do happen, it’s important to know what to do – and what not to do. Your survival depends on it. In a bear market attack, just like in a real bear attack, your reaction will determine your chances of survival.
Here are five tips for helping you survive a bear market:
Don't panic.
It’s normal to feel anxious about your investments and your financial future when markets are volatile. However, it’s important that you don’t panic during market downturns. Fear is a terrible financial advisor. Many investors make the mistake of selling when markets are falling. This locks in losses and can leave you out of the market when stocks recover. Take a deep breath and remember that this bear market, too, shall pass.
Focus on your goals.
Your investment strategy is based on your unique situation and goals. Take a step back, think about your short-term and long-term goals, then determine if changing your portfolio’s allocation is important. You may find that staying the course and riding out the storm is suitable for now.
Don’t obsess over your portfolio’s performance.
While it may be tempting to log into your account every hour on the hour to check on your portfolio’s performance, doing so can do more harm than good. Checking your portfolio too often may cause you to make decisions you will regret later. During periods of market turbulence, take comfort in one of my favorite Warren Buffett quotes, “Don’t watch the market closely.” Buffett’s words remind us that pullbacks, corrections, and bear markets are a normal part of the investing cycle.
Evaluate buying opportunities.
If you are an action-oriented person who wants to benefit from today’s falling markets, consider purchasing strategies at lower prices. With prices down around 20% since the beginning of the year, this might be the perfect time to add money to your portfolio. Your financial professional can help you identify buying opportunities that align with your risk tolerance, time horizon, and objectives that are appropriate for your situation.
Don’t go it alone.
If your emotions are getting the better of you, check in with your financial professional. During times of market volatility, it’s easy to get lost in your feelings rather than focus on the facts. Advisors deal with market corrections, bear markets, bull markets, and everything in between on a daily basis. They understand how to manage the lows and highs of an unpredictable market. As the markets recover, they will continue to help you stay on track and work with you to adjust as your priorities and goals change over time. The most important thing you can do is have a process and a plan that will give you the best chance of long-term success.
Please reach out if you have any concerns, but in the meantime, take a break from watching too closely. That’s why we’re here.