6 Smart Bear Market Investing Strategies

Having a bear market investing strategy is critical when you’re investing in an uncertain market. The right investments can make a huge difference in your portfolio and finances, after all, and you may find yourself floundering without an effective strategy when the economy is less-than-optimal.

Knowing you and your wealth manager are employing tactics that will help you manage your bear market investments can go a long way toward maintaining your peace of mind. This guide will help you understand the difference between bear and bull markets, what they mean for your investments, and how to prepare your portfolio to weather less lucrative times.

Understanding Bear Markets and Bull Markets

The first step to understanding wealth management and investment strategies is to take a dive into the difference between a bear market and a bull market. There are a few factors the differentiate the two, and memorizing them will keep you on the right track no matter what type of market you’re investing in.

  • Bull Market

In a bull market, the market is on the rise. Most stocks are performing relatively well, and those that aren’t are seeing problems because of the business itself — not because of the economy as a whole. Overall, investors do relatively well regardless of the strategy they choose, because most stocks gain in value fairly steadily over time.

  • Bear Market

In a bear market, on the other hand, the economy generally is not performing well as a whole. Most stocks are declining in value, and many investors may struggle to maintain their investments. The stock market may be highly volatile, with stocks changing in value on a regular basis. It’s thus critical to have a solid investment strategy, a deep understanding of your risk tolerance, and a game plan that will allow you to make the most of your investments and manage your personal finances regardless of any market changes.

Those who are new to investing may find bear market fluctuations to be uncomfortable or stress inducing, but it’s important to keep a level head. An underperforming market does not necessarily mean your portfolio is headed for failure.

What a Bear Market Means for Financial Wellness

Bear markets can mean several things for the economy. Generally, in order to establish a bear market, the stock market must have dropped around 20 points. That can mean a number of difficulties and economic challenges, including that:

  • Employment may be more volatile. 

Companies may need to reevaluate their staffing and costs, which means more people may struggle with job loss and difficulty securing new positions right away.

  • Investors reevaluate.

Investors begin scrambling for long-term investment strategies that will allow them to maintain their personal finances in spite of changes in the market.

  • Consumers shift how they act.

Consumer confidence drops, causing many people to spend less often and protect their personal finances more stringently. This, in turn, impacts businesses’ earnings, which leads to reevaluations of costs, which could create more issues with both revenues and employment.

  • There’s a shift in the business pool make up.

Businesses, especially startups, struggle and are more likely to fail. They may have more trouble getting investors due to low risk tolerance or may have trouble bringing in the customers they need because of consumer confidence dips, employment problems, and more.

It’s critical for investors to have bear market strategies that will help them protect their short-term and long-term investments because underperforming markets happen on occasion. Bear markets usually last for a little under a year and occur every five to six, so every investor needs to have investment strategies that will carry you through.

Origami bear made out of money

6 Smart Bear Market Investment Strategies

As you navigate bear markets, some of these strategies may help you to maintain your portfolio and keep your bank account intact. It’s important to speak with your wealth management advisor to make sure you’re employing all the tips and tricks that are right for your investment strategy.

1. Choose the right investments.

Food stocks and personal care stocks, often known as “defensive stocks,” frequently do well even in uncertain markets because people need such items regardless of the overall economy. Your investment plan should include stocks that are likely to continue to see profits even during difficult times.

2. Look beyond the current situation.

It’s easy to get emotional when your stocks start losing money or your portfolio takes a hit. You need to take emotion out of the equation and look at things from a long-term point of view, however. A few things to keep in mind:

  • Bear markets usually resolve within about a year. 
  • Take a look at how stocks and companies have performed in the past. 
  • Evaluate how the companies you’re interested in weather the current market and how they are likely to perform in the future. 
  • Often, bear markets are an excellent opportunity to invest in stocks you might not otherwise be able to afford. 
  • Within a short period of time, they may well allow you to make significant money when the market turns around.

You should keep a close watch on stock prices as the market changes. Ideally, you do not want to unload stocks when they are at rock bottom. Instead, consider holding on to those stocks until there is an upswing.

3. Diversify across trustworthy companies.

Regardless of the current state of the market, you do not want to put all of your eggs in one basket. Instead, make sure you diversify your investments across several different platforms and types of companies to make the most of your portfolio. Your wealth advisor can help you make sure you’re properly diversifying your investments.

4. Don’t get emotional when managing your investments.

Don’t invest in companies just because they “look good” or because you like them. Instead, choose companies with a solid performance record. You may want to look at how they performed in past bear markets to create a more effective investment strategy.

5. Keep it simple.

If you’re just getting started investing, keep it simple. Don’t try to run a complex strategy that will have you struggle to keep up with your investments. Instead, work with a financial advisor to create a strategy that can help you weather market dips and avoid unnecessary losses.

6. Buy index funds at regular intervals.

Investing in your 401(k) during a bear market is an excellent investment decision that can help increase your odds of reaching your goals. Buying shares when the market is down will help you diversify your portfolio at a lower cost than if you start investing in the middle of a bull market.

Often, the price of stocks and bonds is much lower. While you may take some losses in the early days of the bear market, you may find that the gains even out over time. The key is patience: You will need to watch the changes in the market and wait for it to start to gain again.

Are you looking for solid investment advice that will help you plan for retirement, improve your portfolio, or meet your other investment needs? Contact Bogart Wealth today to speak with an expert about any bear market investing strategies questions you might have.


Please remember that past performance is no guarantee of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Bogart Wealth, LLC [“Bogart Wealth”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Bogart Wealth. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Bogart Wealth is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Bogart Wealth’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.bogartwealth.comPlease Note: Bogart Wealth does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Bogart Wealth’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Remember: If you are a Bogart Wealth client, please contact Bogart Wealth, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.  Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

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