How to Handle a Bear Market
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Few things are scarier to investors than the term “bear market”. Bear markets are characterised by a minimum 20% loss from recent market highs and are often associated with a recession. While people usually hold back on investments during that period, bear markets can be rife with opportunities for investors, and if you know where and how to invest, there’s a good chance that you’ll make it out the other side with a profit. Here are a few tips for making money in a bear market and how to handle a Bear Market.
Try Forex Investing
If you haven’t tried the Forex yet, then bear markets are a great time to try. Money always moves no matter if it’s a bear market or when certain markets enter into the bear mode, as this usually means that there will be a movement in the other direction somewhere. You do have to pick a good trading platform, however, as not all of them will give you the same opportunities. If you’re looking for a reputable platform with loads of exotic pairs, you should check out this forex trading South Africa broker.
A major benefit of investing in the Forex during a bear market is that many people see it as a haven against crashing stock markets. Some currencies like the Japanese Yen, for instance, tend to go higher when in a bear market, and there are plenty of others that act that way, so if you know exotic currencies or pairs, then you could predict some of these price movements.
Move from Speculative Stocks to Value Ones
Diversifying is important during a bear market, but you have to do it wisely. If most of your money is in value dividend-paying stocks, then you’re in a good position. But if most of your stock assets are speculative, you’ll need to move some of your assets towards something safer. This could also be a good time to invest in value ETFs instead of growth ones.
Another benefit of investing in value funds and stocks in a bear market is that you’ll know that many other investors will go in the same direction, so you could look for funds and stocks with swift, high value, and good dividends that are gaining traction without being overvalued.
Hold the Right Assets
Now would also be a good time to invest in bonds and other assets that tend to do well during bear markets. Cryptocurrencies could be a good investment, but you should look at both cryptocurrency mining and buying as mining could be a better option for the long term.
If you’re going to invest in a stock, make sure that you go for companies that have strong balance sheets and solid business models that are recession-proof. A lot of these companies are in the basic consumer goods and utility sector. Investing in defence stocks could also be a good idea, but you should still remember to look at their balance sheets and don’t assume that every defence stock is going to go through the roof.
If you follow these few tips, you’ll have a greater chance of making it out of this bear market in one piece. Always try to find opportunities to earn and consider investing in assets and markets you haven’t looked at before.
Jason Morgan is an experienced forex analyst and writer with a deep understanding of the financial markets. With over 13+ years of industry experience, he has honed his skills in analyzing and forecasting currency movements, providing valuable insights to traders and investors.
Forex Content Writer | Market Analyst