As an investor, definitely one most common question will rise in everyone. i.e what to do now in current bear market? As we observed in the stock market, it is most important that not only finding the good quality stock at right valuation but also finding human psychology. Yes human psychology will plays the key role in stock market which will decide the trend of any stock or index. Don’t do these 5 common mistakes in bear market which we are going to discuss below.
As markets are falling gradually, investors portfolios are moving red in this bear market. Beginners of stock market will definitely get panic as they invested real money and hard earned money. Firstly don’t get panic as already portfolios are damaged. The only thing we can do is minimizing the losses. But how? by knowing and doing these small and common things, will definitely survive in bearish market.
1. Don’t invest in falling junk stocks:
As already we know from the last couple of years stock market grown like anything. In this bull run not only quality stocks but also junk stocks grown 1000 – 100000 times though they are not at all good companies. Those stocks are continuously falling. So don’t invest those kind of stocks as they are available at cheapest prices. If you would invest they can destroy your money within the short time. Everyone knows the old popular saying “Don’t catch the falling knife.”
2. Don’t run behind Speculations:
What ever the market conditions, these so called analysts would keep giving their futuristic levels to the Nifty & Sensex. These kind of people always will be there. If you see the past data they’ve given their predictions even in the bull market, now again they’ve started giving downside bottom levels. But we can say one thing very strongly and we believe that no one can knows the future of the world. If so they can make more money by investing in stock market rather than predicting the market.
3. Don’t watch the portfolio all the time:
In this bear market, instead of watching and tracking the portfolio, please do track your stock which you already been invested. Any negatives are coming or any changes are happening in the stock. If you see 30 – 40% fall in the portfolio, you wil definitely get panicness. So instead of that please try to build conviction about your stock by analyzing deeply, so that you will get confidence to hold your stocks even in the bearish market, also you can add it in further corrections.
4. Don’t sell total stocks with panic:
If you would’ve analyzed deeply before investing into any stock, this kind of situations will never bother you. If you have invested without any knowledge your will get panic and you will sell your stocks with the huge losses. Just for this purpose we don’t need to invest in the stock market. Everyone invest in the stock market to make money. But what we are doing is buying at higher levers and selling with losses, actually should buy at lower levels and book profits at higher levels. As we all knows we are doing completely opposite.
5. Don’t try to time the market:
No one will never know the exact reversal levels. So please try to understand this act accordingly. As we holding quality stocks no need to bother about any corrections or anything. In this king of situations we should not invest total money at once or don’t buy one stock with total money, both are too much dangerous. So try to keep adding your stocks systematically in evey 30 – 40% corrections. That will average your buying price and will help you out to get out of this kind of situations.
Conclusion:
Anyone’s ultimate aim to invest in stock market is to make money. So we should stick to this thumb rule forever as long as we continue as an investor in the stock market. To make money from the stock market we should always invest at lows and sell at highs, but we do in opposite manner. So the retail investors always face losses in their stock market journey. We should be more cautious in the bear market than In bull market, as it will gives more tough conditions. So please avoid above discussed points and don’t do these 5 mistakes in bear market.
People also asking:
What should I do during a bear market?
- Don’t hold junk stocks
- Average quality stocks in every 30 – 40% correction.
- Invest your money in multiple tranches
- Don’t sell off your total portfolio
- Build conviction about any stock before investing.
Is it good to buy in bear market?
Of course we should invest in the corrections only. But don’t invest in single stock or total money at a time, try to invest in multiple tranches. Always invest in quality stocks. Please try to build a conviction before investing into any stock by analyzing deeply.
Can we make money in bear market?
There are many ways to make money in bear market. By using suitable investment tools we can make money from the stock market. Short selling, trading options, inverse ETFs, catching level based short term movements in both directions will make you money. But remember these are always risky. Learn something of market to do these kind of things in the stock market.
How long does a bear market last?
Actually past report says that bear market will continue for one year and it takes 2 years of time to recover. But the actual thing is no one can exactly time the market. So the best way is to invest in multiple tranches would be helpful. Buying quality stocks is also a very much important.