Call Our Offices
Your Money.
Your Life.
Your Way.
What to Do When the Bear Market Rallies
Shared by Strong Valley on August 9, 2022
What to Do When the Bear Market Rallies
Image of a stop watch for the in-brief section heading
Here's a quick look at what's in this article:

Even though there is an ebb and flow of wealth accumulation in the stock market, trying to predict when those healthy returns might take place is almost impossible. In the meantime, there are lessons to be learned and research to be done that can lead to future opportunities.

Important Disclosure: Content on our website and in our newsletters is for informational purposes only. The information provided may (or may not) directly apply to your situation. We recommend that readers work directly with a professional advisor when making decisions in the context of their specific situation.

The real value of a bear market may be that it gives investors, who are temporarily frozen within its grip, the opportunity to learn or relearn important lessons regarding risk and diversification. For savvy investors, a bear market also creates a period for looking beyond emotional headlines and studying the hard facts – facts that can ultimately place them in a position to take advantage of coming opportunities.

Periods of falling equity prices are a natural part of investing in the stock market. Bear markets follow bull markets, and vice versa. They are considered the “ebb and flow” of wealth accumulation.

Balance Your Anxiety with Reason

Bear markets create apprehension in the minds of many people. That’s natural. However, any feelings of anxiety should be balanced with reason for anyone seeking financial success. Anyone dubious about the need for a stable outlook should consider that virtually every bear market was followed by a better than average annual rate of return from the bull market.

But just as importantly, bear markets have also at times delivered very healthy returns while the bear was on the prowl. And trying to predict when those healthy returns might take place is almost impossible.

Bear Market Rallies

Previous bear markets have delivered some very significant rallies. And while they did not predict the end of the bear’s reign, these rallies do provide good reasons to remain invested.

Focus on Five Lessons

Instead of taking a “time out” from the market, and missing out on potential opportunities, investors should focus on five key lessons the market has repeatedly been trying to teach everyone during its naturally occurring economic cycles:

  1. Periods of falling prices are a common part of investing in the stock market.
  2. An investment’s value will be greatly influenced by fundamental factors, such as profit and revenue growth.
  3. Diversification, while it does not assure against market loss, often provides the safest haven against the ebb and flow of changing markets.
  4. Invest over time, rather than make single lump-sum purchases. (Falling stock prices are the friends of dollar cost averaging investors.) Of course dollar cost averaging does not guarantee a profit or protect against a loss in a declining market and it’s important that investors continue investing through fluctuating market conditions.
  5. Take a long-term view when investing in the stock market. Short-term fluctuations are natural. (The investment price and underlying business often have little to do with each other over the short term.)

Remember that you’ll be inundated with all kinds of economic information during both bear and bull markets. There will be reports, for example, about inflation, interest rates, and unemployment figures that may entice you to either give up on the stock market or invest in it to the exclusion of investments paying relatively smaller returns. To avoid being lured to either extreme, develop a financial strategy with your financial advisor that accounts for risks you find comfortable.

Review your investments regularly to help ensure they are still relevant to your overall financial plan, and that you’re staying on track.

Then trust yourself and stick with your plan.

Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results or even estimates of actual returns a client may achieve. This information is designed to provide general information on the subjects covered. Consult your financial professional before making any investment decision. Opinions and estimates offered are subject to change without notice. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. Please see other important disclosures related to

Your turn – What would you like to know about What to Do When the Bear Market Rallies?

Strong Valley wants to provide useful and meaningful information to our clients, to our professional network, and to the broader community of people we serve. We’d love to hear your questions about What to Do When the Bear Market Rallies or about any other topics you care about. You can call our office directly, or use the contact form below to send us your questions and/or suggestions.  And if you found the information helpful or entertaining, we hope you'll share the Strong Valley story with others.

We love to hear your questions, ideas, and feedback!

  • This field is for validation purposes and should be left unchanged.
Copyright © 2024 Strong Valley Wealth & Pension, LLC
Investment advice offered through Integrated Partners, doing business as Strong Valley Wealth & Pension, a registered investment advisor. The information on this website has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Registration as an Investment Adviser does not imply a certain level of skill or training. Strong Valley Wealth & Pension, LLC offers some securities through M.S. Howells & Co. Member FINRA/SIPC. M.S. Howells & Co. is not affiliated with Strong Valley Wealth & Pension.
The link you have selected is located on another server. The linked site contains information that has been created, published, maintained, or otherwise posted by institutions or organizations independent of this organization. We do not endorse, approve, certify, or control any linked websites, their sponsors, or any of their policies, activities, products, or services. We do not assume responsibility for the accuracy, completeness, or timeliness of the information contained therein. Visitors to any linked websites should not use or rely on the information contained therein until they have consulted with an independent financial professional. Please click “Continue to Link” to leave this website and proceed to the selected site.