Millionaires Are Made in Bear Markets (2024)

FAQs

Do bear markets make you rich? ›

Investing through volatility

In fact, a bear market can give you more shares of the companies you love, and make you more money over time. A good, old-fashioned buy-and-hold strategy paired with dollar-cost averaging is just a way to consistently accumulate shares.

Be fearful when others are greedy, and be greedy only when others are fearful. In other words, bear markets are often the best time to buy.

Diversifying one's portfolio and favoring higher-quality stocks can curb bear market risks while increasing long-term returns. Defensive stock sectors including consumer staples, utilities, and health care tend to outperform during bear markets.

Investing in bonds is also a common strategy to protect oneself during a bear market. Bond prices often move inversely to stock prices, and if stocks decline, a bond investor could stand to benefit. Short-term bonds in a bear market could help investors weather the (hopefully) short-term downturn.

Long-term investors can find many valuable stocks at lower prices during a bear market, making bear markets a good time to buy if you can afford to wait to see your investments rebound. Traders looking to make a short-term profit may need to use other strategies during a bear market, such as short selling.

Tesla and SpaceX have been Musk's best investments to date. But he's also done quite well with The Boring Company, which provides infrastructure and underground tunnel construction services. Musk invested around $100 million of his own money to get the company off the ground, as CNBC also reported.

Should you stay invested in a bear market? ›

“Investors who remain even keeled and disciplined in a negative market are likely to avoid common pitfalls and potentially enjoy better times ahead. Historically, the longer you stay invested, the greater your possibility of meeting your long-term goals.” Check in with a financial advisor.

Behavioral risk: During a bear market, investors may be more likely to make emotional decisions, such as selling their positions based on fear or panic. This leads to unwise investment decisions and significant losses.

Money that you'll need in the short term or that you can't afford to lose—the down payment on a home, for example—is best invested in relatively stable assets, such as money market funds, certificates of deposit (CDs), or Treasury bills.

And Millionaires Are Made in Bear Markets!

SO, as long as you stay focused on the long-term picture of continued growth and innovation – you'll be positioned to make a fortune.

Bear markets are largely pessimistic ones, so profits can be realised from short-selling in the bear market. They can also come from buying at the bottom of a bear market or a buy and hold strategy, where traders simply wait out the bear market and ride the price rally up.

In a bear market, stock investors can get rich by taking advantage of falling stock prices and buying shares at a lower price. They can also invest in defensive stocks that perform well during economic downturns, such as health care and consumer goods.

However, the index only recently finished recouping its bear-market losses and today sits just slightly above its January 2022 peak. With potential economic threats remaining and market uncertainties looming in 2024, investors may still need to have patience before a truly durable bull market can get underway.

The duration of bear markets can vary, but on average, they last approximately 289 days, equivalent to around nine and a half months. It's important to note that there's no way to predict the timing of a bear market with complete certainty, and history shows that the average bear market length can vary significantly.

Bear markets are largely pessimistic ones, so profits can be realised from short-selling in the bear market. They can also come from buying at the bottom of a bear market or a buy and hold strategy, where traders simply wait out the bear market and ride the price rally up.

Is it worth investing in bear market? ›

Of course, once you begin investing, don't expect to see immediate returns amid a bear market. Instead, focus on positioning your portfolio for the next bull market. Although most stocks and sectors may fall during a bear cycle, some will buck the trend.

Invest in stocks that you want to own for the long run, and don't sell them simply because their prices went down in a bear market. Focus on quality: When bear markets hit, it's true that companies often go out of business.