The S&P 500 briefly fell into a bear market on May 20, 2022, dropping 20% from its last record high in January 2022.
While investors might be bearish on an individual stock, that sentiment may not affect the market as a whole. But when the market turns bearish, almost all stocks within it begin to decline, even if individually they’re reporting good news and growing earnings. Your financial plan should be sufficiently flexible to adapt to your circumstances as they change and to keep pace with the economic and market conditions in which your investment operates.
Another advantage: Cash reserves can come in handy in down markets. With cash, you can buy in when prices are attractively low. So cash can provide your portfolio with some stability and flexibility .One great thing about long-term investing is that time tends to smooth out volatility. You can also manage volatility with diversification.
Automating your contributions is a precommitment that can help counter behavioural bias, because, as the market sells off more, you start to wonder what the market is seeing that I don’t. Having a precommitment in this type of environment can be a powerful way to do the right thing, even when it feels really bad.Be careful of the mantra that floats around that says “buy the dip”. If it’s a meaningful selloff, there can be more selloffs.
PSGPretoriaOos Does the statement above imply that you haven't yet seen the transformation into a bull. What percentage turn from the bottom are you looking at before confirming the transition convincing?
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