How To Invest In Bear Markets

Every now and then, the stock market will make a switch from a bull market to a bear market. The bull market is when the economy is doing well and companies are making money. This provides an excellent opportunity to make money on the stock market. A bear market, however, is a different ball game. A lot of money can be lost when the market goes from a bull market to a bear market. Here are some tips on how to make stock picks in a bear market.

The stock market needs to go down about 20% before it is officially called a bear market. The truth is, though, that by the time it has gone down that much you have already lost a considerable amount of money in stocks. This makes it all the more important that you be prepared in advance and learn how to profit in more difficult times.

Stocks during a bear market are much harder to pick than in a bull market. In fact, it can be very hard to select them at all. During a bull market you can definitely expect to lose some money simply because of how hard it will be to make a right pick.

The nice thing, though, is that when companies are at the bottom, you really cannot go wrong with investments at that time because they cannot go any lower. Knowing that time may be a little hard to guess, however, unless you start to see some evidence that the economy is starting an upswing again.

You will actually want to stay away from certain types of stock during a bear market. Some of them may show promise for a little while, but then will soon age and falter like other stock at the time.

This can especially happen when the increase is due to a particular product put out by a company. Owning stock during a bear market needs to be reduced to a few so that you do not incur losses over a wide area. Select a few that you think will do better than others and consolidate with them. Only make new investments that you are more or less sure of, and avoid doing any blind or ignorant investing.

With the Internet these days, you have a lot of opportunity to get all kind of investing tips from professional individuals and from investment companies. There really is not any reason why you need to depend entirely on your own gut feeling. When others come up with the same interpretation of trends and company profitability, you stand a good chance of making a better investment.

Selling off some of your stock and buying gold may have merit as well. Investing in silver, however, is not a good idea because it traditionally will follow the market. This will require some investigation, as well as proper timing to ensure the best results. Holding on to other money instead of investing it is good until the market starts to turn a little bullish again.

You can learn more on how to invest from http://www.howtoinvest.freedvd.com.au

James McInnes is a professional share market trader and investment entrepreneur, with many years experience trading the Australian Share market. You can visit his site at http://www.freedvd.com.au for further information on trading the Australian Share Market

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