The S&P 500 Index is officially down more than 20% from its latest peak which means we are now in a bear market. It can be depressing to look at account balances and wonder why we invest if we’re only going to watch our account values go down, but take courage, statistically bear markets don’t last nearly as long as bull markets, and in moments like these there are opportunities to take advantage of.
It goes without saying that you should not look at your account balances every day to see how much you “lost.” It also goes without saying that you should use this opportunity to invest more if you have the cash. Stocks are trading at historically low price-to-earnings ratios and some are even trading below price/book prices.
During a bear market such as this one you can put into practice some tactical strategies to help you rise out of this cycle even stronger.
It may help to shift from value to growth stocks. Growth stocks have been hit the hardest this year, with some technology growth stocks down 50-80% this year alone. There may be some opportunities to sell some of your losses in value stocks which haven’t fallen as far, to buy more beleaguered growth stocks so that when the market bounces back up, you get more lift. You could also utilize this strategy with stocks and bonds, etc.
Buy I-bonds. They’re paying 9.62% right now and adjust with inflation which is at 40-year highs. You’re guaranteed not to lose your money (unless the US government defaults and we’re all toast at that point anyways), and 9% guaranteed isn’t bad at all. You can choose to delay paying the taxes on the interest or pay it every year as you go.
Most importantly, be a student of history and remember that what goes up must come down, but also, what goes down, will come back up again.
Hang in there.
When Daniel is not giving financial advice or managing investments, he enjoys renovating properties, real estate investing, drinking coffee, hanging out with friends, spending weekend trips in his camper van, and exploring the outdoors on a hiking or biking trail in his hometown of Roanoke, VA and beyond.
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