May 27, 2025
Financially Speaking
Navigating Bear Markets: Tips for Staying Composed During Downturns
Wall Street may be nearing a bear market, as concerns grow that tariffs on imported goods could impact global economic stability. But what exactly is a bear market, and how can investors stay steady when markets dip?
What is a Bear Market?
A bear market is a period when the prices of securities, like stocks, fall by 20% or more from recent highs. It’s marked by widespread pessimism, negative investor sentiment, and selling pressure.
Why the name “bear market?”
The term comes from the bear’s behavior—hibernation—symbolizing a market retreat. Conversely, a rising market is called a bull market, because bulls charge forward, representing upward momentum.
6 Tips to Navigate Bear Markets
1. Keep Emotions in Check
Bear markets can be nerve-wracking. Fear and negative headlines can overwhelm you, but reacting emotionally often leads to poor decisions.
2. Don’t Try to Outrun the Bear
Avoid jumping in and out of the market. Selling during declines may cause you to miss the recovery. Remember: time in the market beats timing the market.
3. Stick to Your Long-Term Strategy
Focus on your long-term goals. Review your portfolio regularly to ensure it aligns with your objectives but avoid drastic changes based on short-term market swings.
4. Use the Downturn to Your Advantage
Bear markets offer opportunities to buy quality investments at lower prices. Consider rebalancing your portfolio to maintain your target asset allocation.
5. Adjust If You’re Taking Income
If you rely on investment income, consider reducing withdrawals temporarily. This helps your portfolio recover when markets rebound.
6. Stay Calm and Ignore the Noise
Bear markets come with plenty of doom-and-gloom headlines. Staying calm and sticking to your strategy usually leads to better outcomes.
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