What is the best thing to do when a grizzly bear is chasing you? That’s right, play dead! In a bear market, that is also the most important advice you may ever read. Playing dead means staying put. The worst action any investor can take is to watch the market decline, panic and sell everything. Remember to stay calm, remember your investment goals and.
By playing dead I don’t mean to put your statements in the family safe and forget about them for the next 5 years. I mean you should not make any investment decisions without sitting down and thoroughly reviewing your entire portfolio and fully understanding your entire financial situation. Once you have a good idea of what is going on with your personal finances, you can start to make educated decisions rather than rash decisions.
Instead of watching every spending all day watching the stock market, why not take a walk on the beach or at the park. I don’t mean to be short or unrealistic about this, but if you aren’t watching the market, you can’t get stressed out. If you aren’t watching the market, you won’t make a spontaneous buy or sell. You are playing dead.
Now is a good time to review and update your investment goals and strategies. Sit down with your spouse and investment advisor and review your entire portfolio, your investment plan and your future financial requirements. This is also a good time to review your household budget and make savings a priority. Unfortunately, bear markets also bring increasing unemployment rates.
Even if you have been at your job for a number of years, you still need to review your personal finances. You wouldn’t what to walk into work on Monday morning and find out that your company went of business over the weekend. This is what happened to a number of people on Wall Street that worked with such firms as Bear Stearns and Lehman Brothers.
In addition, to reviewing your household budget, you may want to review all of your insurance policies. These include your home, your car, your disability and your life insurance. Insurance is there for a reason and the reason is hopefully you will never need it. However, during bad economic times you don’t want to have a car accident and be left with an unexpected bill.
Showing posts with label Beat Any Bear Market. Show all posts
Showing posts with label Beat Any Bear Market. Show all posts
Friday, March 6, 2009
Thursday, March 5, 2009
How to Keep a Bear Market in Perspective
I would like to share with you to following headlines:
The Dow Jones Industrial Average is down 175 points…
The Nasdaq is down 2 ½ %...
Oil prices are up $25 per gallon…
Employment rates highest level in 5 years…
Real estate values are declining…
Do those headlines sound familiar? Don’t those headlines read like they were from the newspapers of last week? However, I forget to mention that these are from actual publications from the 1970’s.
Yes, bear markets can be scary; bear markets can cause sleepless nights; bear markets can strain your budget; bear markets can put a strain on your personal relationships.
However, the best thing to keep on mind during a bear market is we have seen them before and we will see them again. Remember, everything that goes up must come down and visa verse. Basically, during a bear market, the stock markets are realigning and readjusting to the valuations after a bull market.
What many investors fear is not simply the decline of their portfolio, but the unknown of where the bottom is. How far will the bear take us? Stock market psychologists refer to this as “ursaphobia” The term “ursa” is Latin for bear. The definition of a phobia is “to fear something”. Put them together and you get Ursaphobia – The Fear of the Bear.
Bear markets can scare not only novice investors but veteran traders, too. What exactly is the definition of a bear market?
A bear market is defined a period of widespread pessimism and falling security prices. Both of these can contribute to negative sentiment and can be self-sustaining. As a rule of thumb, a decline of 20% or more in the broad market indexes is considered the beginning of bear market. The broad market indexes include the Standard and Poor’s 500 (S&P 500), Dow Jones Industrial Average (DJIA), Nasdaq (NASD), etc. In addition, this decline must be over at least a 2 month period.
However, one thing to keep in mind is
a market correction is different than a bear market. A market correction is a short-term price decline, usually less than two months.
One of the earliest bull market and crash was “tulipmania” in Amsterdam the 1630’s. During this time, well-educated investors and the general public alike were so excited in tulip bulbs that livestock, houses and even tracts of land were used to purchase them. Such value was placed upon these rare and valuable bulbs that all common sense was removed from the marketplace. Prices often doubled within days with no apparent end in sight. However, as the market ran its course, as all bull markets do, the tulips lost their value and soon “tulipmania” ended. This crash left behind countless investors holding portfolios of worthless tulip bulbs. Fortunately, the bull markets of today aren’t in tulip bulbs, but this goes to show that fact the history in the financial markets do repeat themselves.
One of the best things to do after you open your next statement from your broker is to sit back and take a deep breath and remember we have been here before. The stock and the economy will recover and you need to position your portfolio to take advantage of the coming rebound and recovery.
The Dow Jones Industrial Average is down 175 points…
The Nasdaq is down 2 ½ %...
Oil prices are up $25 per gallon…
Employment rates highest level in 5 years…
Real estate values are declining…
Do those headlines sound familiar? Don’t those headlines read like they were from the newspapers of last week? However, I forget to mention that these are from actual publications from the 1970’s.
Yes, bear markets can be scary; bear markets can cause sleepless nights; bear markets can strain your budget; bear markets can put a strain on your personal relationships.
However, the best thing to keep on mind during a bear market is we have seen them before and we will see them again. Remember, everything that goes up must come down and visa verse. Basically, during a bear market, the stock markets are realigning and readjusting to the valuations after a bull market.
What many investors fear is not simply the decline of their portfolio, but the unknown of where the bottom is. How far will the bear take us? Stock market psychologists refer to this as “ursaphobia” The term “ursa” is Latin for bear. The definition of a phobia is “to fear something”. Put them together and you get Ursaphobia – The Fear of the Bear.
Bear markets can scare not only novice investors but veteran traders, too. What exactly is the definition of a bear market?
A bear market is defined a period of widespread pessimism and falling security prices. Both of these can contribute to negative sentiment and can be self-sustaining. As a rule of thumb, a decline of 20% or more in the broad market indexes is considered the beginning of bear market. The broad market indexes include the Standard and Poor’s 500 (S&P 500), Dow Jones Industrial Average (DJIA), Nasdaq (NASD), etc. In addition, this decline must be over at least a 2 month period.
However, one thing to keep in mind is
a market correction is different than a bear market. A market correction is a short-term price decline, usually less than two months.
One of the earliest bull market and crash was “tulipmania” in Amsterdam the 1630’s. During this time, well-educated investors and the general public alike were so excited in tulip bulbs that livestock, houses and even tracts of land were used to purchase them. Such value was placed upon these rare and valuable bulbs that all common sense was removed from the marketplace. Prices often doubled within days with no apparent end in sight. However, as the market ran its course, as all bull markets do, the tulips lost their value and soon “tulipmania” ended. This crash left behind countless investors holding portfolios of worthless tulip bulbs. Fortunately, the bull markets of today aren’t in tulip bulbs, but this goes to show that fact the history in the financial markets do repeat themselves.
One of the best things to do after you open your next statement from your broker is to sit back and take a deep breath and remember we have been here before. The stock and the economy will recover and you need to position your portfolio to take advantage of the coming rebound and recovery.
Does Your Investment Portfolio Suffer from Ursaphobia?
The Dow Jones Industrial Average lost 20% of its value the week of October 5, 2008. After looking at the damage done during this incredible week in stock market history, many novice and experienced investors began suffering from ursaphobia.
Ursaphobia is not something that has been truly felt by investors since the great bear market of 1973-1974 or the stock market crash of 1929, but urasphobia is back. So what is ursaphobia? The term “ursa” is Latin for bear. The definition of a phobia is “to fear something”. Put them together and you get Ursaphobia – The Fear of the Bear.
Ursaphobia is the fear of the bears and the bear market of 2008 certainly has had a lot of bear sightings. In fact, one of the triggers to current market conditions can be related back to the very first bear sighting. The first bear sighting in 2008 was the tumble of Bear Stearns. The great Wall Street investment firm which fell from glory and was scooped up by J.P. Morgan for a mere fraction of the market capitalization of only a few months earlier.
After Bear Stearns, then came the next bear sighting, the credit crunch. Credit was drying up for both business and consumers. This helped to tight the hold on the market. As the great minds of the Wall Street attempted to solve the problem, the bear reappeared with a vengeance during the week of October 5, 2008 and swiped off over 20% of the Dow Jones Industrial Average.
Here are few points to remember to ensure your portfolio doesn’t suffer from ursaphobia?
#1: Remember we have seen bear markets before and the economy has survived.
#2: Keep on top of your investments. Consult your broker several times during the month or review your statements weekly.
#3: Remember you can’t control the market, so do allow the stress take control of your life.
#4: Review your investment policy statement and make any adjustments to your investment goals.
#5: Consider buying bear market insurance. Bear market insurance include inverse investments and put options. These are investments that are designed to go up in value when the underlying security declines.
These are only a few ideas to ensure you don’t suffer from ursaphobia. Remember the best way to ensure your financial future to stay atop all of your investments and keep in contact with your broker.
Ursaphobia is not something that has been truly felt by investors since the great bear market of 1973-1974 or the stock market crash of 1929, but urasphobia is back. So what is ursaphobia? The term “ursa” is Latin for bear. The definition of a phobia is “to fear something”. Put them together and you get Ursaphobia – The Fear of the Bear.
Ursaphobia is the fear of the bears and the bear market of 2008 certainly has had a lot of bear sightings. In fact, one of the triggers to current market conditions can be related back to the very first bear sighting. The first bear sighting in 2008 was the tumble of Bear Stearns. The great Wall Street investment firm which fell from glory and was scooped up by J.P. Morgan for a mere fraction of the market capitalization of only a few months earlier.
After Bear Stearns, then came the next bear sighting, the credit crunch. Credit was drying up for both business and consumers. This helped to tight the hold on the market. As the great minds of the Wall Street attempted to solve the problem, the bear reappeared with a vengeance during the week of October 5, 2008 and swiped off over 20% of the Dow Jones Industrial Average.
Here are few points to remember to ensure your portfolio doesn’t suffer from ursaphobia?
#1: Remember we have seen bear markets before and the economy has survived.
#2: Keep on top of your investments. Consult your broker several times during the month or review your statements weekly.
#3: Remember you can’t control the market, so do allow the stress take control of your life.
#4: Review your investment policy statement and make any adjustments to your investment goals.
#5: Consider buying bear market insurance. Bear market insurance include inverse investments and put options. These are investments that are designed to go up in value when the underlying security declines.
These are only a few ideas to ensure you don’t suffer from ursaphobia. Remember the best way to ensure your financial future to stay atop all of your investments and keep in contact with your broker.
5 Investment Strategies Not to Follow in a Bear Market?
The week of October 5, 2008 was one of the worst weeks in stock market history. What the markets did in one week, it took months and years to do in the past. The speed of events is absolutely incredible. Thanks to the Internet we are always in “live time” with the rest of the investment world.
No need to wait for the newspapers to be printed to tell us the overseas markets are down 5%. We can see watch the Tokyo market drive 10% while are eating breakfast. We can watch the futures of the Dow Jones Industrial Average recover from a 700 point loss and crossover into positive territory in a single morning, as it did on October 10, 2008. In one aspect, this ability is vital, however it can also encourage us to make rash decisions. Here is list of 10 investment strategies not to follow in a bear market:
#1: Sell everything: By selling everything your portfolio will not be able to recover when the market rebounds. If you are in cash, you have no chance of being in the market when it rebounds.
#2: Watch your computer screen: Watching every tick on the computer screen can drive you crazy. Don’t watch the stock market every minute of the day.
#3: Watch the nightly news: Remember the news anchors only job is to get good ratings. There job is tell you only the headlines. The more sensational the headlines are, the better it is.
#4: Read the newspaper: Again, the job of the newspaper is to sell newspapers. Again they sell the headlines and not the entire reasons what caused the headlines.
#5: Listen to the radio: Radio and radio talk shows are there to get ratings, too.
Also, keep in mind newspapers, news anchors, radio talk show hosts can’t give you individual advice. They don’t know your individual situation. They can answer your question in a 30 second segment or in a single email.
No I am not saying you should stay uninformed, but what I am saying to for you to keep everything in perspective. If you get caught up the hype and the doom and gloom of every down tick of this bear market you will find yourself suffering from a condition stock market urasphobia. Ursaphobia is a term stock market psychologists refer to as “fear of a bear market” The term “ursa” is Latin for bear. The definition of a phobia is “to fear something”. Put them together and you get Ursaphobia – The Fear of the Bear. So don’t follow the five steps about to ensure you don’t suffer from ursaphobia.
No need to wait for the newspapers to be printed to tell us the overseas markets are down 5%. We can see watch the Tokyo market drive 10% while are eating breakfast. We can watch the futures of the Dow Jones Industrial Average recover from a 700 point loss and crossover into positive territory in a single morning, as it did on October 10, 2008. In one aspect, this ability is vital, however it can also encourage us to make rash decisions. Here is list of 10 investment strategies not to follow in a bear market:
#1: Sell everything: By selling everything your portfolio will not be able to recover when the market rebounds. If you are in cash, you have no chance of being in the market when it rebounds.
#2: Watch your computer screen: Watching every tick on the computer screen can drive you crazy. Don’t watch the stock market every minute of the day.
#3: Watch the nightly news: Remember the news anchors only job is to get good ratings. There job is tell you only the headlines. The more sensational the headlines are, the better it is.
#4: Read the newspaper: Again, the job of the newspaper is to sell newspapers. Again they sell the headlines and not the entire reasons what caused the headlines.
#5: Listen to the radio: Radio and radio talk shows are there to get ratings, too.
Also, keep in mind newspapers, news anchors, radio talk show hosts can’t give you individual advice. They don’t know your individual situation. They can answer your question in a 30 second segment or in a single email.
No I am not saying you should stay uninformed, but what I am saying to for you to keep everything in perspective. If you get caught up the hype and the doom and gloom of every down tick of this bear market you will find yourself suffering from a condition stock market urasphobia. Ursaphobia is a term stock market psychologists refer to as “fear of a bear market” The term “ursa” is Latin for bear. The definition of a phobia is “to fear something”. Put them together and you get Ursaphobia – The Fear of the Bear. So don’t follow the five steps about to ensure you don’t suffer from ursaphobia.
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