How Intelligent Investors Behave During a Bear Market

For many of you, 2022 is the first bear market you’ve experienced as an investor. Whether you read the Wall St Journal or turn on CNBC, there is constant fear the market will continue to plunge. There is blood in the water. What are we to do?

Despite what the pundits keep saying, this volatility is expected and normal. Let’s look at a specific example of Netflix. As of July 7th, 2022 Netflix was down 70% over its most recent high, wiping out years of gains. However, since 2011 Netflix has been up over 1000%. But during that timeframe, the stock has experienced a 50% loss on five or more occasions.

Fear is a powerful motivator. Fear amps us up and puts us on high alert. But we also make bad decisions when acting out of fear.

What if, instead of selling your investments and hiding under a rock, we decide to see this market correction as an opportunity? If you haven’t made your IRA contribution for 2022, now is a great time to buy stocks at a 20% discount. Or, how about a Roth conversion? Right now, you can convert 20% more shares!

Breathe. And then look at your investor policy statement. These market corrections and volatility are the price we pay for the long-term gains we get from stocks. We are building long-term wealth. We are creating a future without worrying or even thinking about money.

Doesn’t that feel better?

Reach out here if you want to chat about your current situation.

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