The Psychology of a Bear Market - Adviser Investments

The Psychology of a Bear Market

Bear markets can be unnerving, but they also present opportunities. Equity Research Analyst Kate Austin discussed stocks on sale in our recent quarterly webinar*: Separating Pandemic Noise From Investment Signals.

Please enjoy the excerpt below and click here for the full webinar replay to hear more.   

* * * * *

Kate Austin: As my colleagues said before, the definition really of a bear market is stocks falling 20% or more from their highs.

Now, most financial people love jargon. So, in the financial world it’s called a “correction,” right? But in the everyday world, we call it something else. It’s a sale.

Now, I don’t know about you guys, but I have been getting nonstop sale emails from stores. I don’t know if you bought anything—I know I have. In fact, the other day I bought a fancy Le Creuset pan that I’ve had my eye on for a while that was 40% off. And I don’t know about you, but those pans never go on sale.

So, if you bought something in the past couple of weeks, have you also put money to work in the market? Because we have. But if you haven’t, why not? It’s really the same thing.

And here’s the real kicker, too. Like [Chairman Dan Wiener] was showing earlier in his slides, stocks tend to actually appreciate in value over time. And whatever tangible thing you may have bought will definitely be worth less in a year or two.

And like we saw in March, everything is often sold when we have these events en masse and the companies with great products, great management teams and strong battleship balance sheet, stocks that, like that Le Creuset pan, really never go on sale, are actually for once on sale. So it’s really a great time to get high-quality companies at a bit of a discount.

* * * * *

Click here for a replay of Separating Pandemic Noise From Investment Signals. Please contact us at (800) 492-6868 to learn more about comprehensive wealth management solutions.

*Webinar recorded after the market closed on Wednesday, April 22, 2020.

Disclaimer: This material is distributed for informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Our statements and opinions are subject to change at any time, without notice and should be considered only as part of a diversified portfolio. Mutual funds and exchange-traded funds mentioned herein are not necessarily held in client portfolios. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed.

You may request a free copy of the firm’s Form ADV Part 2A, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged.

Past performance is not an indication of future returns. We do not provide legal or tax advice, nor sell insurance products. Tax, legal and insurance information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice, or as advice on whether to buy or surrender any insurance products. Always consult an attorney or tax professional, or licensed insurance professional regarding your specific legal or tax situation, or insurance needs.

© 2020 Adviser Investments, LLC. All Rights Reserved.