Bear Market

Bear Market

What is it and how to take advantage

Means a market in which share prices are falling, encouraging selling. This is a definition by dictionary, but what actually this means for a investor point of view and drives the shares price d evaluate or the encouragement of the assets sell off?

Usually the Exchange is marked by popular enthusiasm and speculation with positive sentiment indicators which drives the prices of an asset increase. Fundamentals appear extremely positive and due to the populism investors keep buying disregarding the actual price that has been paid for the asset purchased. Often overpriced buy the market.

Those behavior does not reflect the actual value of a company and you should always look for the intrinsic value of a company to evaluate an opportunity.

• Intrinsic Value

In finance, intrinsic value refers to the value of a company, stock, currency or product determined through fundamental analysis without reference to its market value

 During bear market periods, investing can be risky even for the most seasoned of investors. A bear market is a period marked with falling stock prices. In a bear market, investor confidence is extremely low. Many investors opt to sell off their stocks during a bear market for fear of further losses.  

• Origin of term

 The term "bear market" is named for the manner in which a bear tends to attack.

A bear will usually swipe its paws in a downward motion upon its prey, and for this reason, markets laden with falling stock prices are called bear markets.

Bear markets can last for multiple years or just several weeks. investors in the beginning start to drop out of the markets and take in profits Stocks prices begin to fall sharply, trading activity and corporate profits begin to drop and indicators start to become below average. Some investors begin to panic as sentiment starts to fall.

Don't Be Afraid of a Bear Market

Bear markets are inevitable, and you have to be willing to endure them in exchange for the opportunity to get life-changing wealth from your investments during the stock market's upward moves.

Fortunately, there are ways to prepare for bear markets that can make it easier to get through them when they hit.

You can even boost your overall returns if you're willing to use some smart investment strategies that others may be too fearful to use.

Hunt for Dividends

Dividend comes from a company’s net income, while the stock’s price is dictated by buying and selling in the stock market.

If the stock’s price goes down because of selling yet the company is strong, still earning a profit, and still paying a dividend, it becomes a good buying opportunity for those seeking dividend income.

Bond Ratings

A Bear Market reveals who has too much debt to deal with and who is doing a good job of managing their debt. This is where the bond rating becomes valuable. The bond rating is a widely viewed snapshot of a company’s creditworthiness. The rating is assigned by an independent bond rating agency.

Be Patient

If you’re going to retire ten years from now (or more), a bear market shouldn’t make you sweat.

Good stocks come out of bear markets, and they’re usually ready for the subsequent bull market. So don’t be so quick to get out of a stock. Keep collecting your dividend and hold the stock.