Start Investing in Bear Market
Start Investing in Bear Market
Investing in bear market is always an opportunity for smart investors. Because the investments in bear market gives them maximum returns over the period of time.
Investing in bear market is always an opportunity for smart investors. Because the investments in bear market gives them maximum returns over the period of time.
It is considered to be a fear of losing money in the bearish market but not true to much extent. The smart investors grab this opportunity and invest as much as they can in the falling market to gain more profit. Always follow Warren Buffett theory for investments in share market. But people are convinced to get invested in falling market as the stocks invested might not have a rise. This article will discuss about “Investing in a bear market”.
Most important is to choose a fundamentally strong stock to invest in bearish market. You should always accumulate during this bear market phase.
WHAT IS A BEAR MARKET?
Generally, when an index falls in a short span of time by -20% or more, it can be termed as a bear market. In fact, due to the previous tendency to fall around, the index continues to crash incrementally every passing day.
It is observed that during last 30 days period between 18-Feb’20 & 17-Mar’20, there has already been three times when Sensex fell by more than -5% in one trading day. Cumulative effect of such negative corrections in index builds a bear market.
OPPORTUNITY IN A BEAR MARKET
There is an unstable environment in the bear market. There are more number of sellers of stocks than its buyers. Majority of people prefer to sell their stock holdings whenever index starts to fall. This gradually build a panic situation in the market.
We can’t deny or say the decision of people to be wrong. People try to prevent their losses to more extent by selling as such situation occur in the market. E.g. In year 2008, SENSEX fell from 20,000 to 8,500 levels (down -57%).
SMART MOVE IN A BEAR MARKET
People should remember that it is the history of market that no any phase either bullish or bearish phase will not stay forever. Here we talk about bear market which will eventually pass and market will recover again. So important for investors is to not panic as on date.
What you should do in a bear market? The most important is not to overthink. Because it is often this behaviour which leads us into panic situation.
WHAT IS A SMART MOVE
Please remember, stock investing is all about calculation, estimations and controlling emotions. Better try to accumulate the savings in normal days. Try to invest in financial products with fixed returns (Consult an advisor) and wait for opportunity to invest.
SELL OR BUY STOCKS IN A BEAR MARKET?
Generally, what people do is they buy or sell stocks based on other’s advice. They buy the stocks of the company unknowingly its fundamental study. As a result, when index falls stock-selling happens in sheer panic.
During such crisis, a smart investor does the opposite and grab this as an opportunity without being panic. If a company is fundamentally strong, and its market price is falling, it’s time to collect more of its stocks.
MAKE MONEY IN BEAR MARKET
Most of the people like to invest in bull market because investing is easy in those times. But the actual skill is to invest during bear market phases. The skill the investors must have is to identify fundamentally strong stocks.
If you can develop this skill then it is easier to invest in bear market and make phenomenal amount of money. If one wants to be a long term investor, then the best time to start investing is during a bearish market phase.
Example:
Suppose there is a stock which generally trades at an average of Rs.100 levels. In a bearish market, its price can fall up to Rs. 60 – 65 levels. In this condition, a smart investor will definitely buy this stock.
When market rises, investor might see a price growth of at least 10-15% in next few months. In stock investing, a price appreciation of 10-15% in a short time span can be considered excellent. A longer holding time may give even higher returns.
WHAT WE LEARNT?
Bearish market is a panic situation for general people but an opportunity for smart investors to make money.
If you’re already have an investment in stock market, be patient in bear market phase. Do not panic and think of selling stocks.
Once market start to rise, then you may think to sell or still hold.
For investors, there is an option to invest directly in stocks through mutual funds and make money.
For investors without market knowledge and risk free investment, the option of Mutual Funds is always open for investments. You may visit us for more details and guided investment.
One must have a Demat & Trading account to deal with stock market. Kindly consult us for the best Demat services and free Demat Account Opening.
Happy Investing!!!
Happy Investing!!!