Photo: Eve Livesey.
“Are we in a bear market?”
“What should I do if we’re in a bear market?”
As the end of the year approaches, you will start to see many financial newsletters calling for a bear market in 2019…especially considering the way the second half of this year has gone.
Throw in the potential Fed rate hikes, as well as the trade spat with China (reportedly resolved as of yesterday, but who knows?), and you have a recipe for a recession – which could lead to a bear market.
The truth of the matter is that no one knows for sure as to what next year will bring. I wouldn’t be surprised to see the market continue to move higher, and a bear market wouldn’t shock me either.
The last bear market we had was between 2008 and 2009. It lasted for 15 months. Since the 1930s, the U.S. stock market has had eight bear markets, lasting 1.4 years on average.
So what should you do if there’s a bear market?
It depends. If you need your money in the next three years, you should probably take it out of the market. If this year has taught you anything, it’s that you never know when a market sell-off is going to happen.
If your time frame is more long-term, which I hope is the case, then do nothing. If you are a regular investor, and you have a fixed amount that you invest each month, then continue to do so. If we have a bear market, you will have bought stocks at some very good prices. Do not listen to the pundits that tell people to jump in and out of the market because they believe a bear market is coming. I said it before and I’ll say it again: it is impossible to successfully time the market.
We here at Wealthy Joe are long-term investors. We don’t let a sell-off or bear market scare us out of owning great businesses for the long term.