The investment cycle may be coined with different terms like the bull and bear market, but the concept is not as simple as it seems. Investors are aware that rising and falling prices are a natural part of the cycle, but it’s also an essential guide of how to think and react to any movement in prices.
Damon Vickers, New York Times bestseller and expert investor, believes that an investor should be steadfast despite changes in markets. “It’s not an investment if there are no risks and no constant change in our world. We have to adapt and think quickly on our feet,” stated Vickers in a press interview.
What is Bear Market?
Many investors know Bear Market to be the natural part of an investment cycle wherein securities prices decline by 20% or more following a recent peak. It commonly applies to the overall market or index such as the S&P 500. It happens for a considerable period, which may last from two months and up.
The term stems from a bear’s predatory instincts of swiping their target downwards using their paws. The consequence of this part of the investment cycle includes drop in share prices, panic within the industry, capital loss and more.
“A bear market is inevitable, especially since we are experiencing a slow economy,” explains Damon Vickers. “We’ve been in this cycle since December, and it’s a critical time to be the wise investor.”
How Damon Vickers Sees it as Motivation
Pessimism prevails in a bear market. Since it’s indicative of a slowing economy, markets could crash because key players overlook any improvement and instead bank on fears of a recession.
However, Damon Vickers insists that it’s not the end but beginning of another challenge for traders. “We are entering the era of smart investments. It’s suitable to buy high-quality shares at lower prices.”
During this period, it is essential to consider businesses that present a competitive management team and strong balance sheets despite the falling market. These companies will emerge as winners once the bear market slowly leads into a bull market or a steady rise in the trading industry.
It’s not easy to stop the bear market, but Vickers encourages people to remain rational and avoid panicking. In the event of a market crash, less disciplined investors sell stocks hastily, which ultimately worsens the condition and, thus, the bear market.