And in the short run, these higher quality names are less likely to suffer major blows to their cash flows and/or balance sheets during a recession. In the long run, high-quality and industry-leading blue-chip stocks should perform the best. This has both a long-term and short-term benefit. Market, use this rare opportunity to buy discounted blue-chip companies that almost never suffer declines this big. Instead of merely buying the cheapest stocks that have been beaten to a pulp by Mr. Thus, whether you have a lump sum or are simply investing the savings from your paycheck or from dividend payments, deploy capital slowly and methodically. You almost certainly won't invest right at the bottom of stock prices. If you have a big lump sum of cash, good for you! But remember that no one can consistently time the market. Invest Consistently - Not All At Once.The market is bipolar, jumping from mania to depression. During bear markets, as stock prices plunge, investors tend to succumb to the opposite fear - fear of losing everything. During bull markets, investors tend to make mistakes because they often get caught up in the fear of missing out as stock prices rise. Here are three suggestions to help you get through a bear market: Three Suggestions For Investors Amid Bear Markets But for those with money to invest, either in a lump sum or in regular installments (from a paycheck or dividends), bear markets are actually an opportunity to make great investment decisions that will benefit them for decades to come. The fact that the stocks of high-quality companies have sold off so much this year is fantastic news for accumulators - those who are still working, building their nest egg, and putting new money to work in the market.įor withdrawers (those withdrawing money from their investment accounts for spending purposes), there isn't much upside to bear markets. The stocks I'm buying now are far higher quality and rarely ever sell off to the degree that they have today. I delve into these mistakes to highlight the point that more investing mistakes are made during bull markets than bear markets. I ignored some of the problems, namely its complex balance sheet and high property turnover, because I wanted to buy a cheap apartment REIT when all other apartment REITs seemed too expensive.īoth REITs are down big from when I was buying them: SRC by 22% and AIRC by 32%. But I wish I'd saved my money and waited for a more opportunistic price to buy it rather than simply buy it in November 2021 because of an impulse to put cash to work in the highest yielding name in the space.Īlso, early this year, I pitched Apartment Income REIT ( AIRC) as a buy (see " Apartment Income REIT Deserves A Higher Valuation"), if I'm honest, largely because it was the cheapest and highest yielding multifamily REIT. In November 2021, I pitched Spirit Realty Capital ( SRC) as a buy (see " Spirit Realty Capital Is Unfairly Maligned By The Market"), and I was putting my money where my mouth is by buying it myself. I bought stocks and REITs that still had a decently high yield, since the highest quality and fastest growing companies weren't attractively priced. What is an investor to do during such times? Well, what I wish I'd done was to build up a cash position to use as dry powder, available to deploy when stock prices dropped back to what I considered attractive prices. But most of the highest quality, fastest growing stocks in my portfolio and watchlist were bid up to unattractively high valuations and low dividend yields. In 2019 and early 2020 and late 2021, when stocks and REITs (real estate investment trusts) were richly valued, I was still buying stocks, though perhaps not as much in terms of dollar value and certainly not with the same degree of urgency. I had that realization recently when I thought about the kinds of stocks I'm buying now versus the kinds of stocks I was buying in late 2021 and in the six months or so before the pandemic began. More investing mistakes are made in bull markets than bear markets. Dilok Klaisataporn Bear Market: Good News For Accumulators
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