so today we're going to be talking about
how to survive a bear market now the
reason I'm doing this video is because
I'm seeing a lot of comments and just a
lot of people talking about the bear
market or a market correction so
obviously for those of you who don't
know we are currently in a bull market
we've been in a bull market for a number
of years and based on historical figures
we are due for a market correction where
stocks across the board go down in price
so a lot of people are concerned that
the market is getting frothy and that
we're due for a correction any time soon
but I just want to point this out to you
guys nobody out there can accurately
predict when a market will crash nobody
can time the market it is an impossible
task so do I see any reason to start
worrying about it now I see reason to
prepare for it but I don't see any
reason to worry about it for two reasons
number one we can't do anything about it
number two we have no idea when it's
coming we could see this bull market
another couple of quarters you never
know it could go into 2018 nobody knows
for sure but what we can do is prepare
for the bear market and start to educate
ourselves about what a market correction
is and what are the best things to do
during a market correction if you guys
are looking for a good book to read I
have it linked up in the description
it's called unshakable by Tony Robbins
it's all about market Corrections and it
really takes all the fear out of it and
shows you that it can actually be a
tremendous opportunity to build wealth
for yourself so I don't want you guys to
fear the bear market if you're looking
to learn more about it I highly
recommend that book it gets a lot into
these psychological reasons why people
do what they do during a bear market as
well and why many people lock in
horrific losses so I highly recommend
that links in the description if you
guys are interested in that book but
let's go ahead and talk about some
things you can do to survive a bear
market so number one the first thing I
would recommend is say no to high risk
investments I would say say no to these
altogether but if you're someone who
likes to gamble a little bit with your
money make speculative investments there
is a time to do that you know that's
maybe not when we're in an overextended
bull market or when people have serious
concerns about the
health of our market and how much longer
this could last so I don't recommend
doing this but if you're somebody right
now looking around that investment
vehicles say no to these high-risk
investments here's a couple of examples
there's volatility ETFs which fluctuate
based on market volatility a lot of them
are doing the opposite of what the
market does there are leveraged ETFs
which is very similar to margin trading
so an example of a leveraged ETFs maybe
there was one tracking the S&P 500 so it
could be an inverse etf as well so let's
say the the S&P 500 went up in value the
leveraged etfs ETF would go down twice
that amount value so it's important to
your investments and that's just a way
to magnify your wins or losses most
people focus on magnifying your wins but
understand it also magnifies your
potential loss their inverse ETFs we
already touched on that margin can be
dangerous especially in times like this
when many stocks are overvalued and we
are due for a correction at some point
here and any kind of speculative
investments if you're somebody who
trades options or futures things like
that I'm not saying these are bad
investments I personally don't do them
and I don't recommend them to beginners
but I have friends of mine who have made
a ton of money with options and things
like that so I'm not saying they're bad
I'm just saying this is probably not the
time to start playing around with
speculative investment vehicles I would
recommend selling your high risk
investments if you have any and if you
don't have any don't buy any and then if
you're looking to do something with your
money you could buy some low risk
investments you could buy some bonds
we're going to talk about that a little
bit more in a second or you could just
hold cash because one of the best things
to have during a market correction is
cash because you're able to scoop up
undervalued companies so cash is a very
good thing to have
during a bear market I know if you guys
are familiar with the financial
education Channel Jeremy just did a
video talking about how he is currently
40 percent in cash in his portfolio so
he himself is following the strategy of
holding cash and preparing for a bear
market so that's an excellent strategy
number two the next thing you could do
is sell off some of your stocks so you
could take profits off the table when
you can one of my favorite sayings about
the stock market is to take profits when
you
can not when you have to and don't ride
a winner in to a loser so if you have
profits on the table it might be time to
lock in some of those profits and maybe
again hold on to some cash or if you
want to be invested in making a return
on your investment you could sell your
stocks and buy into some bonds so if you
follow the traditional advice of
Benjamin Graham he talks about a 50/50
split of blue chip stocks and investment
grade bonds but in the intelligent
investor again that book is linked up
below to if you guys you're looking for
some good literature on the stock market
he talks about how if you have concerns
about a market being overextended you
could allocate 25 percent of your money
in stocks and 75 percent into investment
grade bonds and the opposite is true if
we're in a bear market and stock prices
are low you would want 75 percent of
your money in stocks and 25 percent in
bonds because stocks are undervalued so
if you're somebody who holds both
investment grade bonds and some stocks
maybe you're going to sell some of your
stocks and put more money into bonds
because bonds hold up better during a
market correction you could also
consider selling some of the growth
stocks in your portfolio and buying some
blue chip stocks historically blue chip
stocks you know stocks on the Dow 30
those stocks have held up better during
bad economic times and we're actually
going to talk about in the next point
here stocks that hold up well during a
economic crash or doing a recession so
number three is buying defensive
investments so the first thing that I'd
recommend doing is to buy broad or
international index funds if you're not
somebody who has these in your portfolio
you really should consider this and by
diversifying globally the problem is
that when there is a crash in the US
economy it's going to affect the global
economy because we play such a big role
in the global markets however being
diversified across a global market does
increase your exposure so the actual US
market falling will not affect your
portfolio as much so diversifying
globally is a great strategy so maybe
invest some more money into those
international index funds or at least
allocate more money into a broad index
fund because that just broadens your
exposure you're more diversified that's
going to lower your risk everyone's
going to lose some money and what I mean
by that is you only
money if you sell everybody's going to
be down money in a bear market your
night and nobody's going to be fine and
if you hold cash you're going to lose
money due to inflation so there's no
good way to go about a bear market
there's no safe way to go about it but
if you are looking to allocate your
money stay in the market and buy some
stocks that hold up well during a
recession
here are some stocks that have done well
in the past first of all utilities this
is something that people need no matter
what you're still going to pay for your
electric bill you're still going to pay
for electricity and heating consumer
staples I mean I'm pretty sure even
during the recession we're still going
to buy things like toothpaste and
deodorant then we have health care
people are still going to take care of
themselves people are still going to go
get their dialysis treatments people are
still going to go to the doctor so these
are recession proof investments here so
these do better during a recession
because these are things people buy and
do with their money no matter what
and then also waste removal things like
that you're still going to get your
trash picked up think about things that
we're going to do no matter what no
matter what the underlying economy is
doing those are the things you want to
invest in if you're looking to look for
investments that hold up well during
poor economic conditions number four
this is one of the best things you can
do if you're not looking to try to time
the market and worry about buying stocks
low and trying to find undervalued
stocks if you're a more passive investor
then just take advantage of dollar cost
averaging I've talked about this a lot
and I've recommended this to dozens of
people in the comments who are asking me
they're saying you know I have some
money saved up I would love to get
involved in the market but everything
appears to be overvalued and should I
dump all my money into an index fund
right now the answer is no your best
strategy is to dollar-cost average over
time so let's say you had twenty
thousand dollars I would not recommend
allocating twenty thousand dollars into
an ETF I would recommend allocating
maybe a thousand dollars a month over 20
months or something like that or even
five hundred dollars a month over a long
period of time that way you're paying up
high you're also paying down low so then
your average cost per share is actually
much lower or you're paying like the
market average for that share because
you're going to pay a little bit too
much sometimes and you're going to also
buy it when it's on a discount so by
doing that you're paying like the market
average for that investment and you're
not going to buy at the top of them
arket if you did invest in an index fund
right now and you did a lump sum
investment you would risk buying at the
top or near the top of the market and
you might see a worse correction in your
portfolio as a result so dollar cost
averaging is probably the best passive
strategy for someone who's looking to
you know make sure they're not buying at
the top of the market someone who wants
to get involved with the market but they
don't want to go all-in right now the
only time when you might want to go
all-in to the market is during a bear
market because that is when stocks are
scraping the bottom that's when you
might want to allocate a bunch of your
money into an index fund I mean it's
impossible a time to market but if
everybody is freaking out and everyone
is selling that's a good indication that
you should be buying number five if
you're invested in these sectors these
are ones that are hit the hardest during
a crash so these are stocks you might
want to avoid before a crash now after a
crash that's a different story because
these stocks are going to go down in
value a lot of these stocks are going to
be way under priced because these are
things that people stopped doing with
their money
first of all travel I mean if you can't
afford to put food on the table you're
not going to be going on a cruise you're
not going to be going on vacation retail
so you're not going to be going to
clothing stores you're not going to be
buying a Michael Kors handbag Auto is a
huge one you're not going to buy a new
car if you can't afford to pay the bills
one of the first things people do during
a recession is stop buying new cars
they're going to buy used vehicles or
they're going to maintain the vehicle
they have recreational vehicles so this
isn't only just campers this could be
things like boats
ATVs anything like that extra things
that people buy people are not going to
be spending money on these things when
they don't have the money any furniture
stores or home decorating stores these
are things you want to avoid because
people are not going to be refurnishing
their homes if they can't pay for their
mortgage okay construction you're not
going to see a lot of construction
during a bear market or during a
recession so you don't want to be buying
construction stocks or building material
stocks or lumber stocks and then
gambling this is a gray area because
some would argue some people would argue
that is what people call a sin stock so
some people recommend buying the sin
stocks during a recession because these
are things people will do to distract
themselves maybe it's alcohol maybe it's
cigarette companies maybe it's gambling
companies my argument is
unless you're a compulsive gambler
you're not going to be going to a casino
but some people may be going to the
casino to try to win some money in order
to pay for their bills if they're
addicted to gambling people call those
the sin stocks some people won't invest
in them just because it's kind of a bad
or negative industry but if you are
someone who just wants to go where the
money is
maybe you will look at tobacco companies
maybe you will look at companies that
sell alcohol but gambling is kind of a
gray area I would avoid it because I
think most people are not going to be
gambling during a recession but then
again people may be wanting to distract
themselves so that's kind of a tough one
number six is the most important one on
this list here this is to avoid panic at
all costs so the only share price that
matters is of the stocks you own so I
know people are addicted to the news
they're addicted to the stock tickers
they're addicted to keeping track of the
markets and you have to remember the
purpose of that is just to generate buzz
and if you're fearful if you're afraid
you're going to cling to the news and
you're going to stay up to date on the
story and they're going to make money
off you because of the advertising they
have more people watching and they're
also encouraging people to be active
they're encouraging people to trade in
and out of stocks and so they're going
to encourage people to be active and
move money around and do stuff when you
should be doing none of that you
shouldn't even be watching the news
maybe you're going to track the stocks
that you're holding but if you see some
company go bankrupt then you don't have
any stock in that company it doesn't
really affect you so why do you need to
know that why do you need to instill
that fear in your brain so I would avoid
any of that negative news I would turn
off the TV and I would get on with your
life guys I would do something else with
your time other than stressing out and
being glued to the TV screen or being
glued to the Yahoo news or the Yahoo
Finance just get on with your life have
a strategy in place and do something
else with your time you can't sit there
being worried about your money all the
time it's going to ruin your life and
it's going to stress you out too I'll
understand that losses are on paper
until you sell so a lot of people say oh
my gosh I lost money in the stock market
when really they're just down on their
portfolio now if they do sell they lock
in those losses because you've now at
that point taken that loss but you could
be down on your investment but as long
as you don't sell you're not going to
lose any money when you
you decide to sell now you've lost that
money so understand that losses are on
paper until you sell and my favorite
point is guys treat a bear market the
way you would an actual bear attack so
two scenarios here let's say you're in
the woods and you're camping and all of
a sudden the bear breaks into your tent
and you panic you start screaming and
throwing your hands up in the air what
do you think is going to happen that
bear is going to eat you ok because you
just made it very clear that you're
afraid and you just brought the energy
level up and now you're going to have a
shitty time you're probably going to be
attacked by a bear maybe you get away
with your life maybe you don't what do
you most people recommend you do during
a bear attack that is played dead lay
there still maybe the bear smells you
and sees that you're dead and has no
interest in you and moves along with his
day that is how you should act during a
bear market you should lay on the ground
and play dead don't do anything at all
do nothing don't panic pretend it's an
actual bear attack number 7 the last
thing you could do during a bear market
would be to short sell stocks and this
is kind of an advanced strategy it's not
advanced in the sense that it's
difficult to do but there's a lot more
going on with short selling stocks I've
done videos about this in the past but
if you are somebody who wants to make
money with the falling stock prices
bearish investors make money by falling
stock prices they bet against a stock so
maybe there's a particular stock you
feel is going to go down in value you
might decide to make a short position on
that stock and bet against that stock so
that's just another way you could make
money in a bear market personally I've
never short sold the stock and I don't
think I ever will just because the
losses on a short sale are potentially
infinite because if the investment goes
against you you could lose even more
money than you had invested and you also
need to do this within a margin account
and you're paying interest in the mean
time so there's a lot more going on with
a short sale and there is just a
traditional investment in a stock but if
you are looking for things to do during
a bear market a lot of people do short
sell stocks so it's something you might
want to look into anyways guys this has
been how to survive a bear market I'm
going to be doing a number of videos
talking about this just because it seems
like there's a lot of people asking
questions fantastic questions in the
comments and I'm just seeing an overall
concern with the market right now so I'm
going to be doing a couple
videos in this style if you guys enjoyed
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