When you're in bear market territory, one of the keys to success is adopting a long-term perspective.
Investors in their 30s, for example, have decades ahead of them before retirement. During a bear market, they can
see it as an opportunity to buy quality assets at discounted prices and hold onto them until the market recovers.
Remember why you're investing in the first place. Whether you’re saving for retirement, a home, or your children's education, your long-term goals should guide your decisions. You can assess whether your asset allocation and investment choices
align with your financial goals and risk profile.
For investors that practice value investing,
which involves buying undervalued assets based on fundamental analysis, a bear market can reveal stocks trading below their intrinsic value, presenting opportunities for value-oriented investors.
Bear markets can also allow income-oriented investors to purchase dividend-paying stocks at lower prices. With Questrade, you can set up a Dividend Reinvestment Plan (DRIP) for your account that will enable you to reinvest your cash dividends automatically to purchase shares or fund units of the company that paid you those dividends. These stocks can provide a steady income stream even during market downturns and can
help you benefit from compounding over time.
A bear market may affect different asset classes, sectors, and industries differently, so the best way to protect your investments in any market is diversification.
Diversification is a tried-and-true strategy for reducing risk in your
investment portfolio. By spreading your investments across different asset classes, industries, and geographic regions, you can mitigate the impact of a bear market on your overall portfolio. Diversification helps balance the potential losses in some
areas and potentially benefit from gains in other areas.