Even when there is a bear market, this does not have to mean that everything is bad.
Follow the stock market blogs and read all of the reports. Consult with your financial advisor, but don’t let any falls in the NASDAQ stock market scare you away from any potentially good investments.
For many new or potential investors, the worry over whether there will be a “bull or a bear market” is such a concern that it can put them off investing in the stock market at all. In fact, when reading the stock market blogs, some of these more common stock market terms can sound quite threatening. However, if you look at stock market terms and values for what they are, you will see that the whole idea is not so threatening at all. (For more on the issue of uncertainty in investing, read my article here:
In fact, someone on Wall Street once coined the term “correction” to replace the word “drop.” It sounds so much nicer to say, “The market had a correction last week,” rather than exclaiming, “The stock market dropped!” The difference in the two expressions is explained depending on who is looking at the situation. A short-term investor or stock trader may feel the panic of the day-to-day turmoil. He would comment on the Greek debt crisis, the flagging confidence in Europe, and the prospect of inflation as examples of reasons why the market might tumble.Credit: Image: jscreationzs / FreeDigitalPhotos.net
On the other hand, long-term investors consider that the most recent spate of stock volatility comes on the heels of a strong economic recovery. In the United States and Asia, this past year has been filled with a fair amount of positive news, including improving corporate earnings, banks repaying their huge government bailout loans, and a strong surge in the stock market. Short-term drops are always to be expected in the stock market. In fact, the correction that we suffered recently was typical of such moves in the market.
When you look at the returns on the U.S. stock market all the way from 1928, you see that the bull markets were always tempered by some retreats. The question is how you will deal with the corrections/drops. Regardless of whether the statistics suggest you should have a proportion of your assets in stocks, if you can’t stand the ups and downs, then you should not be in the market. However, for those people who have money that they can put at risk, and if their goal is to try to make that money grow, there are many opportunities in the stock market. And, when the news is bad and the economy is weak, that’s often the time to begin shopping for good investment bargains.
Disclaimer: This article is for educational purposes and is not a substitute for investment advice that takes into account each individual’s special position and needs. Past performance is no guarantee of future returns.