Bear Market Survival Tactics

There should be no dispute by now that we are in the throes of a vicious bear market.  Oh, sure we can argue stocks are well above where they were back in the financial crisis, and many stocks have not even lost half of those gains.  Yet, current market conditions are such that the prices can go sideways or down for a long period of time.  If that happens, what will/should you do?

At times it is okay to sit it out.  I do this frequently, especially after a rough spell.  This holds for bull or bear markets alike.  But in a bear we have nothing but counter-moves, fakeouts and false hope that will eventually wear us out.  I’ve seen more players throw in the towel due to fatigue, waiting endlessly for the trend to be established or just turn.

Give yourself a break before the market breaks you.  It’s not easy, and at times you will feel left behind, but I doubt you will be permanently scarred by it.  In fact, a break is refreshing, a pause that helps us refresh our eyes and mind.

By playing both ways in a bear market you will not only dampen volatility but increase your chances.  The name of the game is stock picking, and those who can pick the best will perform the best.  Most of us are conditioned to only play the bull side, markets always seem to rise over time.  Only playing the bearish side at all time could have dire consequences over the long term, but there are times where it pays off handsomely.

I come to the table each day looking for opportunities on both sides of the trade regardless of where the trend is at, and with a guarded approach I can assure you this has saved me more times than you can imagine.  Stocks do not grow to the sky nor rise every single day, so if you’re agnostic and just looking for opportunities with an open mind then you’re likely to find ideas on both sides.

As we said, this is a bear market.  However, we have often seen some of the most spectacular bull rallies in bear markets, conversely some of the most awful bear runs in bull markets.  Market cycles are long and drawn out and need to run their course.  Fortunately, bear market cycles are rather short historically, about 18-24 months in length.  So, if you are waiting to re-invest only in a normal bull market, it’ll be at least another year.

Make no mistake, this is not a normal market, so why not embrace the conditions and covet both bull and bear trades?  With elevated volatility, there could be incredible opportunities on both sides.