The market is in a roller coaster mode and it is coming down steeply as they are pricing in for rate hikes. There are a few bear rallies but overall the trend this year is down. We are too used to the previous 13 years of the bull market and need to remember the bear market has taken over.
Nobody knows how long this bear market will last. You can look at statistics of past bear markets but history may not repeat itself. I only know it is kind of depressing to look at the stock market in the downtrend.
I will be looking at how much the portfolio has dropped when I look at the stock market during a bad day. This year is difficult. Your financial plan needs to cater to difficult times. What if this is a prolonged bear? Has your financial and investment plan allowed you to tide through this? You need to stay focused on the important things. For me, I focus on the long run.
The more volatile the market, the more opportunities to accumulate financial assets at a cheaper price. The upside of the bear market is the volatility. I cannot control volatility but I can control what my actions are. The answer is to keep buying quality financial assets.
In the long run, do you think developed economies will keep interest rates high? The role of government is to stimulate economies and create jobs for the population. Short term wise, interest rates will increase to deflate economies. If earnings are deflated, the companies’ share prices will drop further. Brace yourself to buy more, sales are coming to town.
The bad news for me is I am fully invested before the recent drop. I need to save up aggressively for the months to come.
What are you planning to do? Wait and save more? Sell and go away? Comment below and share your thoughts.