25 Essential Bear Market Stock Tips For Investors

Last week the stock market free fell more than 18% as investors tried to navigate a bear market that has ripped through not only the US but the whole world. What are investors supposed to do?

Pros like World Record Holder Dan Zanger advise moving to mostly if not all cash and simply waiting out the storm. Other pros like Warren Buffett recommend investing for the long term and rolling with the market punches.

With many ideas available for investors today, I have created a list of 25 tips to refer to during a bear market. Not all tips may be relevant to your portfolio but hopefully they will offer some fresh ideas, starting with..

  1. Don’t trust ratings systems. In a bear market every technical indicator or trade signal is free game for failure.
  2. Consider lowering the overall risk of your retirement accounts by moving into more conservative funds.
  3. Temporarily stop automatic investments into mutual funds.
  4. For any new positions on the buy side, use tight stop losses of 2 – 4% max vs a 7 or 8% standard during a regular market.
  5. Don’t buy into analyst recommendations.
  6. If day trading, take any profits quickly.
  7. For bigger single day market moves of 5% or greater, consider the opportunity to move your portfolio into more cash by selling bad positions.
  8. Larger defensive stocks with a high yield historically weather the storm much better than growth stocks and the like.
  9. Consider buying ETFs that are short the overall market, QID for example. View a full list of 40 great short ETFs.
  10. Don’t play the, “I have a feeling the market is done selling” game and try to catch the bottom.
  11. Remove any margined positions.
  12. Don’t buy any more positions on margin.
  13. Three heavy distribution days in a row for the market means go away. Unfortunately if you are reading this post then you may have already missed this opportunity to get out.
  14. Three consecutive heavy accumulation days during a bear market means test the water with extreme caution, don’t jump right in.
  15. Cash is king. Take advantage of FDIC insured high yield savings accounts and sleep a little better at night.
  16. It is a fact that three out of four stocks follow the overall market trend.
  17. If your investment advisor can’t send over a list of all of your current positions and tell you your exact portfolio status he/she shouldn’t be in control of your retirement.
  18. For new investors, understand this is not the time to be getting your feet wet to “see what happens”. Being on the sidelines for a few more months is a very smart move.
  19. Don’t hold onto bad positions, learn how to sell a stock you love.
  20. It is a fact that during the 2000 – 2002 crash analysts were making 10x more buy recommendations than sell recommendations on stocks. Don’t fall for it.
  21. The bigger your ego before the bear market, the greater the fall during the bear market.
  22. During the 2000-2002 crash multi millionaires were made by selling stocks short on weakness.
  23. Typically the biggest market leaders during a bull market are some of the biggest sellers during a bear market.
  24. Remember to think long term. The 2000 crash lasted about two and a half years, and while no one can predict the severity of the current bear market historically we always come out.
  25. Keep educating yourself. Take time to keep up with the news, talk with friends, and read investment books. Especially for young investors the opportunity to learn is critical for the future.

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