How to Invest During This Time of a Bear Market and Coronavirus (Covid-19)

March 18th, 2020

how to invest in a bear market

Stocks were rising, GDP was growing, and the economy was booming. It was the longest bull market in United States history. But just like that it came to a sudden screeching halt, with a selloff that marked one of the steepest one-day fall since the stock market crash in October 1987. Escalating worry worldwide regarding the outbreak of the Coronavirus (COVID-19) has wreaked havoc on the market and turned it into a bear market.

What Is A Bear Market?

When the market has a steep, prolonged download slide and loses 20% or more, analysts refer to it as a “bear market.” A bear market is characterized by falling stock prices, poor economic conditions, and a looming recession; however, it doesn’t always result in a recession. The bear market varies in depth (how much value stocks lose) and length (how long the losing trend continues), and usually continues for two months or more. Woman’s Worth® Founder, speaker and author Jeannette Bajalia says for some clients investing in the market now will actually help grow their wealth since stock prices are so lower than they have been in years.

The Perfect Investment

In Retirement Done Right! Don’t Just Invest… PLAN! author, renowned speaker and founder of Woman’s Worth® Jeannette Bajalia says the perfect investment includes liquidity, safety, and growth. From a retirement income planning standpoint, you need all three of these “money qualities” represented in your portfolio:

  • High returns: if you’re going to invest your money, it only stands to reason that you want a return on your investment.
  • Safety of principal: in other words, you like the idea of high returns, but you don’t want to lose what you invested.
  • Liquidity: you want to be able to get at your money when you need it.

Timing Is Key

Don’t jump headfirst into the deep end of the stock market, but instead wait a day or two to test the waters. Successful investing requires a meticulous balance and awareness of timing. When people estimate the gains, they will need to recoup losses after a market tumble, they usually guess wrong.

“I saw with my own eyes the pain and panic on the faces of those who had trusted their stockbrokers to handle their investments through their retirement years only to lose as much as half their life savings when the financial crisis of 2008 hit,” explains Jeannette Bajalia. “Many of them had to postpone their retirement for years and lower their lifestyles dramatically. Their problem was timing and now we have another repeat and those people now have another market crisis. I only pray that those who chose to stay put with an investment strategy much like they had in 2008 are not impacted significantly but most likely they were.”

Had they retired a year earlier, and reduced their market risk according to their age, they would have been fine. But the one-two punch of a sudden drop in the market and the fact that they were now in withdrawal mode instead of accumulation mode was a killer. The time it took for the market to recover was one thing, but the time it took for them to recover personally was another thing entirely. In order to grow your wealth during a bear market, you need a trusted, experienced financial advisor that understands the opportune times to invest.

How To Pick Your Portfolio

Your goals and how to best achieve them should be the principal driver of how to invest your savings. Your portfolio should be a balance between safer, conservative investment strategies and more aggressive growth focused ones. The last month has seen tremendous pressure and selling of stocks, which has made many people nervous.

Creating a well-diversified portfolio of stocks from all over the world, along with safer strategies like bonds, cash, CD’s or other fixed interest strategies, will help you not just get through the tough times, but potentially create opportunities. Having a plan and investment portfolio that is based on your goals, and not based on today’s headlines is critical in being able to look past the short-term swings and stay on course.

Trust The Recovery

When we look at charts that show the recovery time of the market, few investors will exactly mirror the movement of the markets because human nature and raw emotions get in the way. The age-old mantra of investing is “buy low and sell high” but often the average investor does just the opposite. They will hang in there out of sheer stubbornness, thinking stocks will bounce back any day now, and the storm will blow over. But when the correction goes deeper and longer, panic sets in and they sell at precisely the wrong time – just as the market starts to inch its way back. Even after it’s clear that a recovery is underway, human emotions often prevent investors from capitalizing on it. Trust the process, heed your financial advisor’s advice, and watch your wealth grow in the long run.

If you have questions or would like to take another look at your investment portfolio and re-evaluate your risk tolerance give us a call at (904) 824-5656 or click here to schedule a consultation with an experienced financial advisor and learn how Woman’s Worth® can work with you to grow your wealth and ease your mind.