Bear Markets Are Normal

Bear Markets Are Normal

Jason Demland

March 11, 2022

That doesn’t mean we have to enjoy them. They happen frequently. I build portfolios knowing this and factor in large pullbacks. Sure, these are buying opportunities and big drops are necessary for those of us that are socking money away for financial independence. They’re also scary as heck and uncomfortable and especially nerve-racking for the people that are taking money out of their investments to live on. We’re used to the S&P 500 only going up for the past 9 years. Since 2013 the index has hit a new all-time high every year! As a result when the market drops, goes flat, and stagnates our spoiled little selves start to get squeamish.

But take heart. I know when the bear market will end.

It will end as soon as stocks stop going down.

The problem is, there are none of us who know when that is. There are plenty of advisors who will pontificate about Russia and inflation and further geopolitical strife. They’ll lead you to believe they’ve got their finger on the pulse of what’s happening and are making adjustments to take advantage of this drop or to mitigate the losses. They’ll confuse you with big financial terms and obscure economic news to give the impression they’ve got it under control and know what to do. But the truth is Warren Buffet doesn’t know. Jack Bogle’s ghost doesn’t know. Even the leading expert on investing in European emerging markets (primarily Russia) guessed wrong on the Russia invasion and lost a record amount for Blackrock’s Emerging Frontiers Fund.

If the smartest investor on the planet with regards to Russia missed this bear market then what do you think the chances of your local financial advisor set up on main street next to an auto parts store or funeral home has?

The fact is that owning stocks for the long term has historically been a great investment. Diversification is your friend. Having a plan is the most important thing. Don’t panic sell. Don’t give into the temptation that you have to do something. Your portfolio was built for times like these. Revisit your plan. Talk to your financial planner.

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