Do these 7 things to WIN in this Bear Market!

The bear market is here 🐻

It’s cruel, scary, and seems never-ending… There is a lot of fear, FUD, and blood on the street. I’m sure your portfolio has also been very affected over the past few months, and you are sad and frustrated looking at your portfolio every day. But fear not! This article will save your portfolio!

Generally speaking, when a bear market happens, the market declines 20% or more over at least a 2 months period of time.

But hey! You need to understand bear markets are just part of the normal market trends. Do you know that since 1928, the S&P 500 has already experienced 26 bear markets?!

The good news is, because of the cyclical nature of capital markets, bear markets NEVER stay forever! For every bear market, a bull market follows. Historically, for the same 26 bear markets since 1928, there have been 27 bull markets!

I understand you may be frustrated with bear markets. But I want you to know that you will generally see your portfolios grow again over time as the market shifts back to a bull market. And the best thing is…

Bear markets are actually the best moment to make money IF you do the following 7 things! So, without further ado, this is how to make money in the bear market:

1. Treasury Management

Right now, CASH IS KING. To always have liquidity on the side during this bear market, can set you up for success. We used to always say, “Cash is trash”, however in a bear market, you always want to have cash available to invest whenever you see a good opportunity (To buy the dip!).

At the same time, you need to control your debt. The Federal Reserve and all the central banks are now increasing the interest rates, so it gets more expensive to get a loan. The best is not to get a loan at all at this moment.

2. Diversification

Your crypto portfolio may be down 70%, your stock portfolio may be down 40%. But if you diversify your investment across different asset classes, you are also diversifying the risks.

The worst thing to do now is to YOLO all your money into one stock/ crypto and hoping (or dreaming) it will be the next Gamestop or Dogecoin. You have to remember that some stock/ crypto may just never recover after the bear market, and it’s smarter to put your money across different assets!

3. Spot the Opportunities

Most investors are not rational in bear markets. They panic sell all their assets whenever they see the prices go down to “stop loss”.

However, if you look at very solid companies like, Amazon, Nike, Microsoft and Apple or even Bitcoin, historically, their stock prices have also been hugely affected by bear markets. But does that define them as horrible companies just because of the temporary price action? Guess not, they are great assets that just got oversold and undervalued, affected by the general market environment. Imagine you panicked and sold your Apple stock back in 2008, you’re probably crying right now.

What you as an investor in the bear market need to do is to spot these opportunities, actively do research to look for businesses/projects with strong prospects for future growth and some type of competitive differentiation, and buy them at huge discounts!

4. Aggressive Savings

This is the time to save money! Cut your Netflix subscription! Stop dining out! Try to cut all the superficial expenses!

Why? During bear markets, the more money you save, the more cash you have on the side to invest in all the solid assets that are currently at huge discounts. Actively investing in bear markets has typically led to much better returns a few years down the line.

5. Dollar Cost Averaging

It’s almost impossible to time the market.

“Time in the market beats timing the market” is true. In fact, no one, not even Warren Buffett, has the crystal ball. Instead of trying to predict the price action of an asset and invest all your money in one go, why not just consistently invest no matter what the price is?

Investing a certain amount of money consistently in an asset no matter daily, weekly or monthly, will make sure you catch all the bottoms.

I have recently made a comparison of different dollar cost averaging strategies for maximum profit and found something quite surprising. You can check out my video here!

6. Stay for the Long Run

Bear markets are the time to test the resolve of all investors. While these times are hard to endure, if you look at the historical data, it shows you probably won’t have to wait for long for the market to recover.

If you look at the Dot-Com bubble in the late 1990s, many companies went bankrupt, but good and solid companies like Amazon, Google, Microsoft, and Apple are still here and thriving. So when you feel fearful, just zoom out and realize the “huge crashes” that are happening right now, in 5–10 years from now, it’s just a little drop on the price chart.

Remember, if you are staying for the long run, the bear markets that you endured will always be overshadowed by bull markets.

7. Go Against the Crowd

I love the famous Warren Buffett quote: “Be fearful when others are greedy and greedy only when others are fearful.” The crowd is never a good indication of what you should do with your investments (and many other life decisions). Otherwise, everyone would already be billionaires, right?

When everyone is panicking and selling, maybe it’s actually a good opportunity to buy. But when everyone is overhyped with certain companies/ projects, perhaps you should look at it with a grain of salt and consider taking profit!

Okay! I hope you all survive, thrive, and win in this bear market, and stay safe out there!

Here’s a special shoutout to Ms. Bee Lee, for her crucial effort contributed to creating this article.

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