What Happens In A Market Crash – Stock markets are struggling with bearish sentiment amid the COVID-19 pandemic. This is the worst crisis since the global financial crisis of 2008-09. There is uncertainty on the way forward. In this post, we will share the main bear market investment strategies.
Bear markets increase the level of fear and anxiety among investors. Many people may be tempted to sell their portfolios and wait. It is important to resist the urge to sell all your shares. Selected results are required. But giving money blindly at low prices is harmful. You may miss the bull run when the tide turns.
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It is very important to check the quality of the portfolio. As market conditions develop, it is important to consider the long-term impact on stocks. Investors need to know how their stocks will react to the current turmoil. Significant changes in portfolio construction can be critical to long-term wealth creation. An investor should have plenty of cash, a quality portfolio and allow it to recover as the broader market stabilizes.
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A “buy low and sell high” strategy helps manage risk and protect your portfolio. Bear markets open many investment doors. Investors should take advantage of the available opportunities. Acting now equals buying at a low price. Low prices ensure better and faster portfolio recovery. A falling market is a great place to pick up strong quality names and very solid ideas. Patience is rewarded when the situation changes, allowing investors to exit at a high valuation.
Bear markets are a scary place for many investors. Those who persevere will be rewarded in due time. Research shows that the average duration of a bear market is 1/5 the duration of a bull market. The average bear market decline is 28%. However, the average return in a bull market is over 128%. The most common mistake investors make is cashing out because they lost 28%. Investors should look not only at losses, but at potential gains in the next market cycle.
In most cases, investors cannot predict a crash or an exact bottom. Gradually, additional investment will ensure good results. The best way to catch a bear market is to turn your investments to the downside. A good rule of thumb to follow is:
Bear markets require careful and expert stock selection. A bear market affects almost all sectors. As a result, many stocks are starting to trade from historic lows. However, at the end of the market cycle, only a few quality stocks will win. Investors must distinguish between value stocks and value traps.
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Hotspots of opportunity can be found even in the worst markets. Tactical investments in specific themes, sectors and assets can provide steady returns even in a bear market. It is wise to invest in quality companies. Other indicators include no/low debt, high ROE and ROCE figures and fast cash flows. Companies with excellent corporate governance practices are also safe.
Investing in a bear market is very difficult. This requires expert advice and knowledge. Hiring a professional portfolio manager is a great way to stay on the right side of the market. Solitaire successfully helps investors navigate bear markets. Mr. Shyam Sekhar, a market veteran with over 30 years of investment experience, heads Solitaire.
Janaki Raman holds a BA in Accounting and Finance from Dwaraka Dos Goverdhan Dos Vaishnav College, Chennai. Before joining, he had experience working with BNP Paribas in the field of investment banking services, specializing in Paris and the Eurozone. He has also passed the CFA Level 2 and NISM exams. He loves finance with a keen interest in personal finance and investor psychology.
Ganesh is a qualified cost and management accountant from the Institute of Cost Accountants of India, the UK branch of the Association of Chartered Certified Accountants (ACCA). He has over 4 years of experience in equity research and business finance.
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Ganesh is the Product Manager of the PMS team. His responsibilities include product marketing, business relationship management and operations management. Prior to joining our PMS team, he was with India Cement Limited where he headed the business finance department of the RMC division.
Namrata Jain is a qualified Chartered Accountant with 5 years of experience in accounting and taxation. He worked as a decision analyst in Bharti Airtel’s financial group. He also has experience as an Indirect Tax Manager in the GST Compliance Division. His interests are wide-ranging and he is also a practicing CFA. He has a desire to learn new things, which made him switch to a different profile in his career and join financial planning.
Susitra holds a PGDM from Narsi Monji Institute of Management Studies (NMIMS), Mumbai. Before joining Deloitte USI, he worked as a business valuation consultant.
Susithra has also passed CFA Level 1 and Investment Advisor Level X from NISM. He is currently pursuing CFP certification. An avid reader, he is passionate about personal and behavioral finance.
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Rajat has ~13 years of experience and over 10 years of experience in mass markets. He has previously worked with companies like Elevation Capital (formerly SAIF Partners), a sector and stage fund, RARE Enterprises – Mr. Rakesh Jhunjhunwala’s family office, Moody’s Analytics.
Prior to joining, Mr. Setia was the founder of SEBI Registered Investment Advisors – VRDDHI Capital Investment Advisors (SEBI Registration Number INA10008832). Mr. Sethio holds a BA (Honours) from the University of Delhi and holds a CFA (Level 2).
Rohit has ~12 years of experience in public markets and ~10 years of experience. He has previously worked with companies like McKinsey & Co, Elevation Capital (formerly SAIF Partners), a sector and stage agnostic fund, RARE Enterprises – the family office of Mr. Rakesh Jhunjhunwala.
Prior to joining, Mr. Balakrishnan was the founder of SEBI Registered Investment Advisors – VRDDHI Capital Investment Advisors (SEBI Registration No. INA10008832). Mr. Balakrishnan received his Bachelor of Science degree from the University of Delhi.
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Balaji MK is a graduate in finance with 16 years of experience in the financial services industry. He has worked with organizations such as Standard Chartered Mutual Fund, Chola Mutual Fund, Reliance Mutual Fund, Citi Bank and ICICI PRU Mutual Fund.
Balaji MK has worn many hats – retail and institutional, product specialist and investment consultant (IC). He takes a keen interest in Marco’s various economic developments and how they affect various segments of the economy.
Balaji is a passionate investor with 14 years of experience in the financial markets. He has extensive experience in various asset and capital management functions. Balaji is an MBA in Finance with a keen interest in the stock markets and has been investing since his college days. He is an active speaker at public forums including Tamil Nadu Investors Association, SEBI Investor Meet etc. Balaji is also a regular columnist for The Hindu newspaper. He voraciously reads annual reports and books on investor behavior. Balaji is involved in research and fund management.
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Prior to joining, he worked in several organizations including GE India Limited and Chartered Accountants Sreedhar, Suresh and Rajagopalan. Thanks to his experience, he has gained in-depth knowledge in various areas of accounting and taxation. He is also qualified in investment advisory from NISM (National Institute of Securities Markets). He likes to learn new things, has an engaging attitude and intends to use these skills and move forward in his career. He likes to play badminton and is an aspiring accountant.
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Gaurav is a qualified Chartered Accountant with over 7 years of experience in capital markets, personal finance, auditing and taxation. He has been with us for the last 5 years and is currently part of the PMS team and assists the IT Director in managing the company’s Solitaire fund. He is also part of the financial planning team. Before joining, he worked with two multinational companies in accounting consulting and financial control groups.
Niranjan is a graduate in Applied Mathematics from College of Engineering, Guindy. In addition, he passed the FRM (Financial Risk Manager) certification exam from GARP (Global Association of Risk Professionals). Niranjan has a keen interest in financial markets and has been following the stock markets since his school days. He has been an active investor for over sixteen years. Niranjan has been a strategist for a long time
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