According to a recent news today, the PSEi is seen trading with a bearish bias this week. I agree with this because I’ve been observing the market and I saw a lot of volatility this past 2 weeks. The index is falling since its all time high last April and from what I see, I believe we are now experiencing a market correction or maybe a bear market.
So what do we do during market corrections and bear markets? Always remember these 4 basic things:
4 things to remember during bear markets:
Spell LONG-TERM-INVESTOR; Y-O-U-!
Long term investors with a sound investment strategy in place should just sit back, relax, and wait for the market to rebound. Investors who react on market sentiments without the proper strategy usually acquire big losses. Re-balancing your portfolio and waiting till the market settles is what most experts recommend during these times. Doing so balances your asset allocations and maintains your risk tolerance in line with your investment goals.
Are you focusing on the fundamentals instead of the hype?
The best time to apply the saying, “Be fearful when others are greedy, be greedy when others are fearful.” is during a bear market. You see, even if the market drops, the company fundamentals remain the same. It is also during these times that the media becomes a repository of all the hyped-up news that will veer you away in your investing plan. So as the experts say, take every bit of information lightly but still stick to your investment strategy.
Are you focusing on the risks?
Re-balancing your portfolio and managing your risks is what you should be focusing on during bear markets. To do this, check if your portfolio still meets your expectations so that you may assess if the risk you’re taking is high or below your risk tolerance level.
Go stock shopping!
If you have extra funds, this is the time to start buying more shares. It’s during these times that you need to stick to the fundamentals and think of the market correction as like a 6-month sale on a shopping mall where we begin to buy stocks at a discounted price. As Warren Buffet says, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Happy investing!