Navigating the Markets during a Bear Market: Lessons from history.
Today’s market looks similar to the market in 1929. Others have written about this similarity for a few years now. Knowing this, how can you invest to maximize your gains?
Many investors are keeping a close watch on their portfolios. Some may even be withdrawing from securities and into money market accounts. Here are some things to think about in the midst of this market bloodbath.
- Timing the market is futile. “Buy low, sell high.” This phrase sounds easy on paper. But it is difficult to execute. I tried this. I became greedy and made poor decisions. I ended up buying as the market’s buying sentiment was in high gear. I sold when everyone was unloading. In both cases, I lost out.
- The only thing you can control is your asset allocation. For example, 25% in SP500 index funds; 25% in emerging markets; 25% in real estate investment trusts; and 25% long-term government bonds. There are many ways to skin this cat. The idea here is to stick to whatever asset allocation strategy you’ve committed to. Then rebalance as the market fluctuates.
- Simplify and minimize. Don’t do anything irrational. Stick to an asset allocation strategy. If you must delve into speculative assets like cryptocurrencies, keep it to a minimum. Set a small portion of your overall asset allocation for stuff like this. You’ll scratch the speculative itch while still being safe.
When the market is bearish, it’s easy to get caught up in the frenzy and make poor decisions. Remember to stick to your asset allocation strategy, simplify your investments, and minimize speculation. These tips will help you navigate through this market crash and come out ahead.
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