We’ve discussed Bear markets in great detail and how it’s important to remember that they are a normal part of the market cycle. This month’s client corner examines the worst things a long-term investor could possibly do in a bear market.
The first is to sell out of a well-diversified portfolio of quality equities. Nobody enjoys watching the value of their portfolios go down. However, it’s important not to let panic sway your decision making. A market decline should be viewed as a potential opportunity to put money to work for the long run while stocks are trading at a discount.
The second worst thing is the terrible temptation to hold back cash that needs to be invested, trying to catch a market bottom. We’ve said this again and again, it is imperative that you focus on time in the market vs. timing the market. Statistically, it is impossible to time the market from an entry and exit perspective and result in better returns than one that takes a buy and hold type of approach.
Ensure you make your investment decisions based on your long-term goals and objectives. Invest in stocks that you want to own for the long run, and don’t sell them simply because their prices have gone down in a bear market.
We hope you enjoyed this month’s Client’s Corner. Please do not hesitate to reach out if you have any questions or feedback.
Thinking about hiring a professional to help you implement a long-term financial strategy? We would be more than happy to set up a 30-minute discovery call to get a better understanding of your unique situation.
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