What to do during the bear market cycle.
By: Mr. King San Josè-Santos,RFP,CFC,LFA,CTA
For the past few months, we saw the prices wipsaw almost all markets worldwide due to the Ukraine war, an increase in inflation, and other macroeconomic issues beyond our control.
But based on history, since the creation of the stock market, people tend to experience different market cycles and always end up on the winning side.
Understanding investing in funds.
Unlike investing directly in the market, one significant advantage of investing funds in a legal institution is that it helps you do market research and monitoring. The fund managers and researchers do the market analysis and price adjustments on behalf of the client under strict government regulation. It takes out the burden of you making the wrong decision in acquiring the right company for your fund.
What is a bear market?
To simplify it, a bear market is a market condition where business conditions tend to correct themselves due to macroeconomic data, overvaluing asset classes due to high demands, or worldwide events.
My investments are going down. Do I panic and sell?
It actually depends on your financial objectives. Always remember that the market will always have cycles. Cycles between bull and bear market. That is why we always inform clients to always check their holding period around 5 to 10 years to minimize the volatility of the market. The market will always correct itself as the fundamentals will follow the uptrend projection.
Possible actions you do during a bear market?
Most clients tend to panic or get affected by what they see in their portfolio however, learning from the experience of investors from the Philippines to the US, when you have cash during a bear market, this is the time to go shopping for more assets buying at a bargain.
Changing your mindset from retail oriented to business oriented.
Most people tend to follow the trend rather than understand the whole situation. Hardcore institutional investors tend to understand the market condition and tend to take the opportunity of every market cycle they see. In this case, when we are entering the bear market territory, they tend to buy more on the "dips" ( extreme exaggeration of market price lower ).
Let's discuss some basic investors' strategies.
Dollar-cost average: Most investors tend to buy slowly every month the same budget of a specific asset. You tend to buy more when the market goes down and buy less when the market goes up. This allows you to average out on the positive and a discount in the long run.
Fixed income investment: From special dividend funds like Insular life , JP Morgan fund to bonds up to maturity. You can invest in these materials to counter the volatility while you wait for the market cycle to finish.
Invest in Dollar fixed income: As people fly to the dollar during tough times, you may take advantage of high dividend yield special funds like Insular life JP Morgan US dollar Fund to help you earn dividends while taking advantage of the appreciation of the dollar.
In summary,
During a crisis, always keep your emotions in check. Retrace your financial goals and check how you will take advantage. Always remember, the greatest investors are the ones who took advantage of any crisis recorded around the world.
If you require any free financial consultation, feel free to contact me via SJ&P helpdesk at (02) 8790.4111 to schedule a one-on-one meeting with me.
Know more about the writer.
Mr. King is the Senior Managing Partner of San Jose and Partners.
He is a Registered Financial Planner, Certified Financial Consultant (IFC USA-Canada)
Multiple licensed professionals for Life insurance, Investments, Health care, and non-life, and a Certified Technical market analyst.
He handles mostly advance problems, VIP, and corporate accounts of the firm.
To contact Mr. King, you may email
or call our helpdesk (02) 8790.4111
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