An investor will see a bear market in one of two way.  

1. They will fear for the total value of their portfolio going down  

2. They will get excited for the chance to be able to buy stocks at a discount 

A bear market is defined as, when a securities price falls 20% or more from recent highs, it also has to have widespread pessimism and negative investor support.  

They may or may not be accompanied by an economic downturn, usually a recession.  

The most recent bear market we had experienced was during the 2020 stock market crash caused by the coronavirus which began on February 20^th and ended on April 7^th. This was only a few months but it was enough to cause a drop of around 37% in the Dow Jones industrial average from the highs of 29,551.42 to the lows of 18,591.93. 

Looking at the market now you wouldn’t think that in less than a year we would have recovered not just the losses from the crash but actually surpass the highs. (As of 2/2/21 the Dow Jones is 30,687.48) 

There are going to be some investors that see a bear market as the worst of times. This is because when the index starts to fall 20%+ they see all their hard-earned money being taken away. They may try to get ahead of their losses and start to sell because if you sell your stocks you are no longer in a bear market.

Believe it or not, this only makes a bear market worse for the reason that it is causing negative investor support. As more and more investors add to this negative support it pushes the market’s lows even lower. 

The other half of the investors will hold out or they may sell some of their holdings because they wanted to take profit off the table, but they also use that same money to rebuy stocks at a new discounted price. If the company is strong with good business sense and it’s just the market around it pushing the price down than why not just buy at a discount? What this does is it allows you to be able to ride the wave all the way back up and sometimes even further. 

These people are the ones with the mindset geared towards wealth is not just made when times are good, wealth is also made when times are taught because that’s when the opportunities emerge. If you are willing to take the risk on these opportunities the return may surpass your own hopes.  

A bear market isn’t anything to take lightly it usually mean the world or the U.S. is experiencing bad times. The light that comes from such a dark cloud is that opportunities will start to pop out, and if you miss these opportunities you may never have another chance. (I’m not a finance adviser, this is for education propose only. Please make decisions bases on your own financial situation).

Bear market final thoughts:  

As an investor you do have to be cautious during a bear market but that doesn’t mean that you have to put up with losing money, with the right knowhow and taking the right opportunities you could be coming out a winner when everyone else is losing all around you. 

As always, have a great day and keep learning and moving towards your goals, never stop pushing!