- Date : 06/07/2022
- Read: 2 mins
The market usually gets the title of the bear market when the investment price falls by 20% from its high over a long period of time. However, these fluctuations in the market are temporary, and with great strategies and planning, one can easily overcome them.
What Causes a Bear Market?
Unpredicted Fluctuations: There can be a negative impact on the company’s performance due to some political decisions. Thus, this can affect the investment of a company too.
Fluctuation due to Global Mindset: There is a continuous rise in the interdependence of countries. Therefore, a fluctuation in any other significant economic country can also affect the others. For example, due to the conflict between China and America, the Indian economy was also affected. The current conflict between the two most significant economic powers, Russia and Ukraine, has led to fluctuations in Indian imports and exports. Thus, it causes a fall in the Sensex points.
To learn more about the bear market, watch this video https://youtu.be/Qra5BGng7IA.
Strategies to Handle a Bear Market
Let’s explore some of these:
- Avoid Knee-jerk Actions: While going through a bear market, investors might be tempted to jump out of it until the assets stabilise again. However, this can be the worst choice as you might have to lose your capital permanently.
- Try to Invest Regularly: If you regularly invest in the market, regardless of the market conditions, you are more likely to buy the equity at a much fairer price. This method of regularly contributing to your portfolio is known as rupee-cost averaging. This systematic investing method has proven to be efficient during the recent market decline.
- Look for Opportunities: If there is a downfall in the market, then several other options, such as defensive stocks, consumer staples, firms with better quality balance sheets, and businesses, can provide strategic opportunities. You can also look for stocks with higher dividends that have good historical growth. This strategy will help you increase the total return during a market downfall or bear market.
To learn more about investing in a bear market, visit this link: https://youtu.be/BlC32AUDDnM.
A bear market occurs when the price of an investment drops by at least 20% over a given period. However, the investors might not panic and follow some strategic plans to survive in such circumstances. A bear market can occur for a number of reasons. However, there are other ways to get through it as well.
Disclaimer: This article is meant for general financial purposes only. You must not take it as any form of legal, taxation, investment, or insurance advice. You must seek separate, independent advice when indulging in financial decision-making.