How can an investor survive a bear market in Kenya? We might be experiencing one of the fastest hitting bear markets as a result of the Corona Virus pandemic.
There are very many questions going through the minds of many investors wondering what they should do in order to minimize their losses. There is quite a number of blogs and articles with conflicting information about what one should do.
I have done some research and gathered a few strategies given by the best analysts at wall street and I will be sharing the, below. However before then, it is important to understand what a bear market is.
What is a bear market?
A bear market is a time when the stock prices are falling sharply. The main standard to determine this is if the stock prices have fallen at least 20% over their most recent high.
It is always very hard to know when the market is going to recover or how long it is going to take. That is why a bear market is seen as the most difficult to navigate especially by the beginners in this trade.
However, it is important to keep in mind that, just like a bull market is inevitable, a bear market is also inevitable.
Strategies to survive a bear market
Most times when a bear market happens, most investors panic. Panicking is the worst thing to do during a bear market as it leads to an investor making the wrong decisions.
Here are a few strategies to survive a bear market
Do not panic
As I have mentioned above, panicking leads to one making poor investment decisions that might cause major loss. The first strategy is to maintain your composure.
A lot of people will try pulling their money out the market, but this acts only to their disadvantage most times.
2. Keep a bit of More Cash at hand
Keep a bit of money ready for any emergencies that might arise. But also to give you more purchasing power when the stock market is on sale again.
Do not time the market as you might end up failing. However, when things have been on the decline for a little longer, you may want to start buying.
However, this strategy may also be dangerous especially when the bear market lasts longer than expected.
3. You might want to keep investing in diversified portfolios
Keeping investing while a bear market is ongoing is a crazy idea. However, it will help you balance your investments as well as minimize risk especially if you are doing this for the long haul.
4. Stop Loss orders
If you are trading using an online stock account, chances are you had put in place some stop orders.
The main benefit of adopting this strategy is that you can keep your stocks as they go down until their prices begin to rise again.
5. Have a side hustle
If you are able to generate income from doing something else then try it out. This turns out to be very helpful in future especially if by bad luck you get laid off.
However, it is important to understand that during a recession even side hustles are affected.
Diversify your sources of income if you can.
Read More: How to Make money online 2020
Conclusion on surviving a bear market
Always keep in mind that bears are a part of life. That it is still not the end of everything. Keep hopeful, avoid negative media and follow the strategies above and you will emerge stronger.