5 LESSONS from the Bear Market

Nov 13, 2022

Hi Traders, Investors and Speculators 📈📉

Ev here. Been trading crypto since 2017 and later got into stocks. I have 3 board exams on financial markets and studied economics from a top tier university for a year. Daytime job - Math Teacher. 👩🏫

Bearish markets are a normal part of the economic cycle, but even after years and years of repeating processes and patterns, it can still be hard to embrace.
The real value of a bear market may be that it gives investors the opportunity to gear up for the next cycle, in other words to accumulate and buy in cheap. It also helps you see the importance of managing your risk and diversification. For example - let's say you've invested 100% of your free cash into Bitcoin. IF Bitcoin were to trade sideways or lower for a longer period, lets say months, you have no capital left to invest in other potential opportunities. You are also missing out on rallies that may be happening across other markets. Your portion of diversification is definitely dependent on your initial capital investment, but try to diversify as far as your capital allows.

For savvy investors, a bear market also creates a period for looking beyond emotional headlines and studying the hard facts — facts that can ultimately place them in a position to take advantage of coming opportunities. Periods of falling prices are a natural part of investing in the stock market. Bear markets follow bull markets, and vice versa. They are considered the “ebb and flow” of wealth accumulation.

Now, let's take a look at 5 Things YOU should remember during the Bear Market :

❗ Periods of falling prices are a common part of investing / speculating

❗ An investment’s value will be greatly influenced by fundamental factors, and sometimes fundamental factors is enough to create a bullish or bearish market for that assets and related assets

❗ Diversification, (even though it does not protect anyone against losses), often provides the safest haven against the ebb and flow of fluctuating markets

❗ Invest over time, rather than make single lump-sum purchases. In other words, falling prices are the friends of dollar cost averaging investors

❗ Take a long-term view when investing in the stock market. Short-term fluctuations are natural. Try to invest in projects that are undervalued, rather than jumping in whilst a coin is in the middle of a parabolic rally.


Check out this idea on ETH that covers dollar-cost-averaging:

Remember that you’ll be bombarded with all kinds of economic information during both bear and bull markets. There will be reports, for example, about inflation, interest rates, and unemployment figures that may encourage you to either give up on the market or invest in it. To avoid being lured to either extreme, develop a financial strategy that accounts for risks you find comfortable. Then trust yourself and stick with the plan.


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CryptoCheck

Nov 13, 2022

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