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Should investors dread a bear market?

Team Veye | 23 May 2022

Should investors dread a bear market?

All great achievements require time. Time duration varies from person to person. But one thing to always remember is NEVER GIVE UP.

When investors repositioned for higher interest rates and a potentially faster rate rise cycle as indicated by Fed, Australian shares fell and broadly followed Wall Street. The turmoil in the stock markets globally shook the confidence of many an investor.

It is common knowledge that wealth creation is a continuous process. There will be periods of stagnation, when your real conviction gets tested. Investors tend to forget that all good things come to an end and all bad things eventually settle & lead to a good start. Stock market operates with this simple principle and the cycle repeats time and again.

A big mistake in market is forcing trades when there is none. If there is nothing to trade, don’t search for the trades. Wait till a proper set-up pops and the market offer you an opportunity.

It is often advised that follow the indicators as it is believed that charts tell the price action of an underlying stock. True, indicators are like information in a car dashboard; But of what use the info on the Dashboard is if you do not know driving.

Drawdown phases are unavoidable but we can try to make them shallow and shorter. Trade the price! Not the market Sentiment.

What’s important is the need to take this period as an opportunity to build future wealth, rather than letting fear take over. The opportunity to invest will continue throughout such phase although trying to catch the bottom could be futile. Eventually, a bear market may end up helping you more than hurting you.

"Bear markets are normal and necessary and serve to clean up prior excesses. They also allow the market to create a whole new set of chart bases and leaders for the bull market that, in time, always follows." - William J. O'Neil.

Disclaimer

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