Three Long Term Investing Strategies to Beat Bear Market

Saturday, November 9, 2013, 1:00 AM | Leave Comment

America is still the land of opportunities. It’s economy at present is all beat up but many economists believe it’s on the path of recovery, albeit very slowly. It’s entrepreneurship is alive and well as always. Similarly, investing in the stock market has picked up from recent years when it had nose-dived in mid to late 2000s. By 2010, the market had picked up quite a bit from the years before.

Almost everyone wins in a bull market. However, avoid buying into businesses that, for one reason or another, you just don’t believe in what they are offering to the public. In other words, either you don’t understand the industry or the products and services conflict with your beliefs.

Long Term Investment Strategies

The following three long term investing strategies would beat a bear market:

  1. Don’t time the market

    Because you have decided to get into the stock market for the long haul, try not to time the market. However and whatever you invest in, always do so for long term. Don’t panic if the market doesn’t do well on a certain day or in a week or not even in a month.

    Timing the market is basically short-term investment. You don’t wanna do that. It makes you panicky and you’d be sitting on the edge of your seat.

  2. Don’t buy into bad business

    You’re able to do research on your own. So why not do it. First choose a specific market (or industry). Once you feel comfortable with it, then select companies (one or more) in that market.

    Once you invest in a company (obviously it’s business must be good and doesn’t conflict with your beliefs), stay with it for the long haul. I’m not saying “Set it and Forget it” but don’t visit your investment everyday or every week or not even every month.

  3. Don’t pay expensive management fee to invest in mutual funds

    Stay away from folks whose management fee can be a detriment to your basic investment strategy. That’s money down the drain, so to speak. There are discount traders available. However, like I said before, you must do your own research to be able to select the stock you wanna invest in.

    The same is true for mutual funds, may be more so. Select mutual funds whose managers have good historical record and where the management fee is one of the lowest in the industry.

Dollar cost averaging

Dollar cost averaging has turned out to be one of the best strategies for the long haul. You set aside a fixed amount to invest every month in the same stock whether the stock has gone up or come down. In the long run, it surely would turn into your favor.

Beginners can invest in Index fund

If you’re a beginner and just starting to invest in the stock market and mutual funds, then “invest in an index fund, preferably over time, so you end up owning good businesses at a reasonable average price,” according to Warren Buffett, the great investor of all times.

Mr. Buffett further states “If you own a cross-section of American businesses, and you don’t get excited (and buy) just at the very top, and if you buy in over time, you are going to do well.”

In a Nutshell
These strategies are not meant to make you a millionaire. But if you become one, that’s obviously for the better.

To summarize, simply follow the below after doing your research:

  • When a stock is cheap,
  • Buy into good solid business,
  • Stay with your investment for the long haul.
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