Many people recognize two types of market in the stock market — a Bull and a Bear. You hear these terms all the time, and they both have adherents in almost any given economic situation.
Bears are folks who feel the situation ahead is looking gloomy, an economic downturn is inevitable short term, and it will last a while. As Chekov said, “the long cold winter of our discontent” — which doesn’t sound good, but keep in mind it is only an opinion. Bulls, on the other hand, have an upbeat, positive look on the future — also just an opinion.
Amazingly enough, these creatures live among us — and among each other. These terms are also perceived as pertaining to sectors of the market as well. You can be bullish on Energy, or Textiles, or Manufacturing. People were very bullish on the “Dot Coms” a several years ago until the bottom fell out. Now that sector is starting to gain momentum again, but this time there is more caution, and companies need to show growth and at least some value.
Now to the meat of things. What can you do when there is a bear market to retain value in your portfolio? I suggest looking for companies that are not quite so dependent on the overall economy and ones that have solid value. No matter the economy, people need to eat, so grocery stocks are going to keep value as are heating oil, gasoline, or staples of life. On the opposite hand, luxury items such as jewelry or high-end autos are going to suffer. People still need to drive, but in tough times, new cars are put off to future dates.
In my investing, I hold value stocks during the Bull or the Bear. Looking at underlying value and growth, you can hardly go wrong. Investments in diamond mines might rise and fall, but for long-term growth, you can stick with steel. There may be more glamour and more grown in luxury (in spurts or even long-term occasionally), but staples are with you for life.
Don’t take that the wrong way. I do have “diamonds” in my stock mix (so to speak), but I know to keep a close eye on those stocks. Other investments can sit for years without a thought to sell. Long-term stable growth will take you through life and treat you right. Taking a chance can pay huge dividends, but remember to only risk what you can afford to lose. With careful due diligence, long shots are exciting and can pay off in spades.
As a closing note, life is what you make it. You must have a realistic view of the future, but know we will go through multiple bulls and bears throughout our lifetime. The ups and downs of the stock market are just like the waves in the ocean. Keep your ship on course and enjoy the ride.