Bear Markets: A Time to Regroup and Prepare for the Next Bull
Many investors have never experienced a long-lasting bear market. The most recent bear market of some duration occurred in 1987, when the Standard and Poors (S&P) 500 Stock Index lost 34 percent and took 19 months to recover. Since then, declines have been short-lived and many investors have become accustomed to seeing their portfolios increase regularly – at least until about a year ago when the bull market came to an end. Now we are in the midst of a severe bear market and many investors don’t know what to do. For many, fear has replaced greed as the primary motivator, and the future is frightening. No one knows if the market has bottomed out or how long it will take to recover losses.
While bear markets are painful, they also can be times of opportunity. Yes, the stock markets will recover! Furthermore, a bear market provides a good time to reflect on your investment plans and reassess your savings and investment strategies. Better times are ahead. We want to be sure that the irrational exuberance of the 90s does not change to irrational pessimism and we don’t want to allow fear to jeopardize our futures.