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What to do with the Stocks When the Market is Bear?

ICICI Securities 07 Dec 2021 0 COMMENT

Introduction

The economy and the stock market move in a continuous cycle, time and again. As a new investor, you must understand the different economic stages and make your investment decisions accordingly. There are unique periods called the bull market and the bear market, and they both come with their overtones.

The bull market is when the financial market rises, and the stock prices increase. Meanwhile, the bear market is where the costs of the securities fall, and there is pessimism in the industry-leading to a downward trend. Investors must act as per the market movement and buy or sell securities accordingly.

What to do in the bear market?

The bear market causes a drop in the price of securities. The decline happens over a period, or it is abrupt. But the result is the same, a decline in the value of your holdings. When the bear market comes into play, it works against you if you sell the stocks if you need money urgently. Owing to falling stock prices, short-term investors end up in losses.

If the intention to hold your investment is for years, buy in the bear market. The ideal time to sell the stock is when the demand is high. Do not make the mistake of selling the stock in the bear market. The best you can do is buy. Some experts warn investors about the crash and let you plan the investment accordingly.

Tips for a bear market

The bear market appears dreadful for investors, and they naturally assume that they will lose money, but it is also the phase of opportunities. Do not run away from the bear market; instead, do the following:

Avoid panic selling

The last thing to do in a bear market is sell in panic. It makes you make wrong decisions that have heavy consequences. Do not use your emotions during this time and use your head. Never sell out of fear. You might see the holdings lose their value with time but panicking only increases the losses. So, stay calm and do not sell.

Be practical

Keep your emotions in check and not be jittery when the market falls. Do not fear the fall and think about why you started investing in the first place. If you have invested for the long-term, you need not worry. The stocks rise with time, and you need not rush it. Have a practical approach towards investment and keep your emotions aside.

Take stock of the situation

Understand the financial situation before making a move. Your money is at stake, and you must ensure that it is stable. Ensure that you have an emergency fund and manage your debts well. Go through a financial checkup and then proceed.

Choose well

The bear market is where some excellent stocks go down and allow you to buy. Some of the best buying opportunities had appeared when the stock market was down. There may be many misplaced stocks whose prices have gone up because of the market correction. And as an investor, you must choose the right stocks. This is a time to make the most of the dip in high-priced stocks and make them yours.

The bear market is not all about losses and negativity. It offers a chance to buy all that looks affordable, and it may not have a disastrous ending. Buy and hold for the long-term; the stock market never remains the same, and what goes down always goes up.

Keywords:

Stock market – 3 times

Bear market – 11 times

Disclaimer - ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.