3 Immortal Investment Lessons from the Last 3 Bear Markets | personal financing

However, bear markets are not as scary as they might seem. Over the past two decades, it has been Standard & Poor’s 500 It experienced three bear markets: the bursting of the internet bubble from 2000 to 2002, the Great Recession of 2007 to 2009, and the collapse of the coronavirus in March 2020.

While these three incidents are different in many ways, there are some timeless lessons that all investors can learn from them.

If history shows us anything, it’s that even the worst bear markets don’t last forever. No one knows for sure how long this downturn will last or how far stock prices could fall, but it is almost certain that the market will eventually recover.

Those previous bear markets weren’t easy either. During the Great Recession, the S&P 500 fell about 57%. When the dotcom bubble burst, it fell nearly 50%. During the coronavirus crash, the market fell about 33% in a matter of weeks. (For context, the S&P 500 is currently down about 23% since early January.)

Despite everything, the market eventually rebounded. No matter how severe this downturn is, things will get better.

As strange as it may sound, the best way to survive a bear market is to do nothing. Do not sell your shares, and try not to worry about falling prices. Simply keep your investment, and if you can afford it, continue investing as usual.

No matter how low stock prices go, you’re not actually going to lose any money unless you sell. Your wallet may lose the value Short term. But once you hold your investment until the market recovers, the stock prices will bounce back and you won’t lose any money.

Also, if you can change it up, downturns might actually be a smart time to invest more. Stock prices are lower than they have been in months, and the market is basically up for sale. By investing now, you can get quality stocks at a fraction of the price.

Not every company will be able to weather a bear market, but strong companies have the best chance of surviving even the worst crashes.

Many of today’s most powerful companies have already survived many bear markets. Although there are absolutely no guarantees when it comes to investing, there is a good chance that these companies will skip this as well.

Checking that your wallet is diversified can make your money safer. When you invest in at least 25-30 stocks from a variety of industries, your money is more protected if one or two of these stocks don’t survive.

Whether you’re a seasoned investor or just starting out, downturns can be nerve-wracking. But this bear market will not last forever, and with the right strategy, you can keep your money as safe as possible.

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