Investing in a Bear Stock Market
This morning, many are dismayed to see the Dow plunge below 10,000. Indeed, after the passage of the $700 billion bailout, many “regular” folks, though annoyed at the rescue plan, expected to see Wall Street reward the government’s cave in with a rally. It is not to be. Instead, many are now saying that $700 billion isn’t enough. Others are pointing out that this financial crisis is going to take time to work through. (Forget about how proponents said this thing needed to be solved now).
At any rate, the time has come to re-evaluate your investment strategy. It doesn’t mean you have to pull everything out, but it is time to look at various factors, including your risk tolerance, and decide which of your investments has more fundamental value and staying power. (The Street offers some recession stock pick ideas.)
Long term investing
One of the best things to remember during a bear stock market is that over time the market generally gains. Long term investing is the name of the game in these times. If you have a long time horizon, then you can afford to ride this one out and wait for a recovery. It might be a good plan to ignore some of the doom and gloom, crisis-driven financial news.
Another option is to load up on Treasuries. And to do it now, before the Fed decides to cut interest rates. Vered, over at MomGrind, makes this observation:
Another alternative is to buy treasuries. Of course, none of this will protect you if our financial system collapses or if uncontrollable inflation erupts, but assuming you’re not going to buy gold bullion and hide it under your mattress, this is probably the best you can do to protect your money right now.
In the end, most of the wealth on paper is just that — paper. Most of us are not going to be able to buy tangible assets, and real estate values are iffy. Even if you could get the approval for the loans you need.
So take a deep breath. And don’t panic.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
Tags: stock market, stock market news, investing blog, bear market,
economy, investments, investment strategy
