Tips for Surviving the Bearish Market
Navigasi - Bearish market is unavoidable. Quoting from a tweet, Jason Yanowitz from Blockwork, currently the bear market is entering phase two. The phase where the price of crypto will drop very far and frustrate investors. It is also in this phase that many investors of various levels choose to exit the crypto market due to volatility and run out of fuel to survive. No one can predict when this second bear market phase will end, what is clear after this phase is that there will still be a third phase.
|Tips for Surviving the Bearish Market|
Macro investor Raoul Pal believes that the current bear market will end only after the Fed loosens its hawkish monetary policy by halting interest rate hikes. That could happen in the next few months, Pal predicts.
Pal sees the combination of high interest rates and fear of an impending recession as the main macro factor causing the current crypto asset market to decline.
Pal thinks that the market bottom has not been reached and a mass liquidation phase involving crypto assets is coming soon.
The S & P 500 index is still enjoying the honeymoon period. After breaking the record of 4,000 in early April, now the index value is still calm at around 4,190.
However, like any other investment, of course there are ups and downs. Sometimes, the S&P 500 index can bounce like it is today and other times it falls down helplessly.
One example of the crash of the S & P 500 index occurred when the COVID-19 pandemic hit all parts of the world in March 2020.
On March 23 a year ago, the value of the S&P 500 index fell 34%, followed by the entry of the index containing 500 bona fide companies throughout the US into the bearish zone.
When the turbulence hit, this stock index fell in just one month. Whereas under normal conditions, the index can be bearish as deep as it takes 11 months.
But that's the stock market. Stock index corrections and falls are common and unpredictable. Prior to the crash due to the pandemic, the S&P 500 had previously lost 10% in 38 sessions.
Reflecting on the events above, a fall in the value of the S&P 500 index in the future is still very likely to occur regardless of the main driver. Investors need to understand this so that they can immediately launch a strategy to secure money that is accurate when a bear market hits.
So, so you don't panic when the S&P 500 is bearish, here are some tips you can do so you don't panic selling, which could potentially erode your profits. What are these tips?
Tips for Surviving the Bearish S&P 500
1. Calm down, don't panic
When market conditions collapse, Buddy Cuan must be able to control emotions. Because for 50 years, from 1970 to 2020, the stock market has corrected 28 times.
So, you need to understand that it is a common thing in the dynamics of stock price movements. Plus, when you have decided to enter the stock market, it means that you must also be ready to face corrections, not just for the sake of it.
Remain confident that the current slump in the S&P 500 stock index will someday rebound in the future. Because, according to historical data, the value of the stock index and market capitalization will always increase following economic growth.
2. Avoid Panic Selling
Panic Selling is a condition in which investors are concerned about a volatile stock market. Usually, in this condition, many investors will dispose of their stock investment assets at any price, which actually makes the index potentially fall even deeper.
If the market experiences an internal correction, don't be influenced by market movements that take a lot of short positions. As long as the shares collected still have a wide growth potential in the future and there is no change in the business in the short term, it never hurts to put on a defensive position.
Because when panic selling, it is very likely that the value of the money in the stock account will be sharply eroded. It's still better to hold on, because it means the losses are still in the form of potential, not in actual value.
3. When the S&P 500 . index Bearish, that's where there is a price discount
A sloping market can also be marked as a price discount for certain stocks.
For example, under normal conditions, share A could be priced at US$100 per share. However, when it was sluggish, the stock dropped to US$70 per share.
This is where the value investing approach can be used. Buddy Cuan can enter or increase the number of shares currently collected and then wait for the momentum to bounce back to a higher price. You can read more about value investing here, right!
So, always prepare extra cash when facing bearish conditions. Because market corrections can be annoying. However, on the other hand, a chaotic market can be an opportunity for even greater profits.