Nervous About Down Markets? Use These 3 Strategies
Even with the U.S. stock market near all-time highs, stocks remain an excellent way to build wealth. But that doesn't mean the path will always be smooth.
Public markets are sometimes bullish and sometimes bearish. In both situations, the market can move by 20% or more. During bull markets, investor optimism propels stock prices sky-high, and during bear markets, pessimism and panic move them down. It's also interesting to note that the 2010 decade has been the longest bull market in history, despite the Great Recession in 2008. Bear markets can be nerve-wracking, which is why these three strategies can help get through these tough times.
The first thing you should do when stocks are falling is stay calm. Recognize that this cycle is temporary. Emotional investing leads to common mistakes such as buying high and selling low. The 2008 financial crisis led many investors to sell substantial portions of their portfolios, and those who did weren't able to take advantage of the S&P 500's 10-year annualized total return of 17.8% since that time. Those who just stayed invested would have recouped their losses -- and then some.
Source Fool.com
