Tuesday, February 21, 2012

Investing in a Bear Market

Currently the share market is in negative but still there is no need to panic because there are some rules to survive in the bear market and these rules would help in returning back to its original position quickly.

Sorry to say, but there are many investor who just could not resist the attraction to experiment in the market, as these investor believe that they can earn good profits because of the short-term price movements. However, there would be some good deals as well but it would be very difficult to recognize and could also give very painful rewards in a bear market.

Bear market as known to everyone particularly to the investors that it is completely different to bull market, not only in terms of price movement but also there are other differences as well that includes:

1. Time Factor:
Bear markets show slow movement of prices provided it is not activated by a crash like the October, 1987. Generally, the price movement in the bear market is slow and reduces gradually.

2. People become poorer:
In bear market there are very few investors who would have the funds and would be willing to invest. Besides broker no one would be interested in trading because the earnings of brokers would have been dried up.

An investor needs to change his mindset if he wants to survive in a bear market, particularly if the bear market has come up after a long-run bull market when everyone would have invested their money on stocks had yielded good returns.

3. Stay happy even if your investment yields low returns
It is the time when an investor earning zero return on his investment must be satisfied because he is better than those who are having negative returns on their investments. It is the time when people used to see their value of investment and stocks falling.

4. You must have cash in hand:
Since most of the investment would give negative returns therefore you must have cash in hand in such time of crisis.

5. You must have diversified your portfolio before bear market or else it's too late:
It is important that you have diversified your portfolio and by doing this you would have reduced your risk, but if you have not done this until the bear market is reached, then it is too late now.

6. If you have cash, keep it with you:
Many brokers would suggest investing in the market and will say that the market is going to get better, but remember that they are thinking about their own personal fee therefore, it is a better idea to wait and enter the market when others have started investing.

The article is written by Ahsan Ayub. Ahsan has been writing articles on different topics including business, marketing, finance, entrepreneurship etc. Besides this, the company offers range of services broadly in the category of Business and IT Solutions. Ahsan also provides consultation to many small and medium sized businesses. You can visit the company website for more details regarding the services offered:

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