Blog 32: How to navigate a bearish market?
Bearish markets suck, I’ll say it as many times as you want. At the moment the NYSE(New York Stock Exchange) is hemmoraging money. When I say Hemorraging money, I mean that seriously. We are seeing losses as drastic as the losses during the Great Recession and comparable to those in the Breat Depression.
Nasdaq and a lot of the companies that saw drastic gains during the pandemic saw losses that wipe out any chance of profits.
Before we get into how to save yourself, My name is Akshith. Welcome to the Finance Spot.
My name is Akshith Konda. I’m a 21-year-old College Student and the CEO, Writer, Author, and editor of The Finance Spot.It’s just something I do for fun, I’m also the CEO, Main Host, and Business Director of the On Your Own Two Feet Podcast. I write Watchlists biweekly and Blogs monthly. I also write on occasion about some news stories and how they may have an impact on the world around us.
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How to save yourself?
There are seven steps you take to save your portfolio from a bearish market.
- Sell off to cover your losses: Sell off a lot of your assets to cover your losses. This allows you to maintain a neutral outlook and also allows you to recover when the markets are high. Sell about 25% of your losses at a weekly high. Cryptos are a bit tricky, since they operate constantly, the best thing to do is to monitor their highs and lows. Sell at a high or median never sell at a loss. It depreciates the coin and in some cases makes it harder to buy back.
- Wait out the storm: When there’s a bearish market, there usually indicates a massive selloff of a stock or group of stocks, the best thing to do is to wait and see what opportunities arise. Bearish markets are often the best place to find opportunistic stock with a high yield at low prices. This allows you to best situate yourself in the best possible position to gain off of that trade.
- Buy Short, Put Long: If your into Options, Buy Calls into Shorting Stocks and Put Long, this puts the Yield Value at a low so the market will fall but what comes around goes around so you will see the benefit eventually.
- Do your Research: Look at the sales plans and profit metrics behind companies but what you should keep a close eye on is Market Cap and Valuation. If a stock has a high market cap, then it will likely stay stable, now market valuation is a bit troubling, the higher the market value the more unstable especially if the P/E(Profit to Earning) Ratio is Low.
- ETFs are a safe Bet: ETFs are large funds full of other stocks. VOO and SPY are good ETFs with high enough profit margins to justify their market caps and Value. With ETFs P/E Ratios don't matter so it’s pretty much fair game to most ETFs that they would be a more diversified and safer option versus individual stocks.
- Buy Long term: Buy Stock in companies that have long term goals and short term results to back up claims, TSLA is an example of one that would make sense in the best possible light but has seen losses. GOOGL is another good example of stock that would best relate to this, these stocks can be a bit pricy, ranging from 600–3K some times, it’s best to buy low to see profits sooner.
- Keep Average Price per share as as close to the original as you can: IF you buy more into a stock, you usually have a price per share cost associated with it. If you buy a stock at a price of 15 dollars and then buy more at 17 dollars, your stuck with an average of 16 per share. Same math works around at other costs associated with how you buy and at what price you buy at. It’s best you buy at a low price and slowly buy more so that your profit per share is maximized.
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