Enduring a Bear Market: How to Stay Steady When the Markets Drop

/ Fiduciary Financial Advisors - Kristiana Daniels/

If you've been watching your investment accounts lately and feeling a little anxious — you're not alone. Bear markets, while a normal part of investing, can test even the most seasoned investor's patience and nerves.

But here's the truth: markets fall, and markets rise. The investors who come out stronger are the ones who stay steady, stay thoughtful, and stick to their long-term plan.

Let's talk about what a bear market really means, and how you can weather it with confidence.

📉 What Is a Bear Market?

A bear market is typically defined as a decline of 20% or more in a major stock market index, like the S&P 500, from its recent peak. While they can feel alarming in the moment, they're a natural part of market cycles. While the most recent dip into bear market territory was quick, and we are not ‘in a bear market’ currently, let’s dive into a few specifics to get a better understanding. Whether it’s this current market volatility or the next, we will most definitely experience more bear markets in the future.

Historically, bear markets have occurred about once every 6 years on average. They tend to be shorter than bull markets, with the average bear market lasting approximately 1-2 years.

That means even though downturns feel intense while you're in them, they tend to be temporary chapters in a much longer investing story.

The chart below puts bear markets into perspective when thinking about the long-term history of the stock market. While painful to endure, they are blips on the radar if you stay invested.

How to Endure a Bear Market Without Losing Your Mind (or Your Money)

Zoom Out and Look at the Big Picture

It's easy to get caught up in day-to-day market swings, but real wealth is built over decades, not days. In the chart above, take note of how every downturn is eventually followed by a recovery and new highs. While past performance is not a predictor of future performance, the stock markets have continued to reach new highs. 

Stick to Your Financial Plan

If your portfolio was built with your time horizon, goals, and risk tolerance as cornerstones in your financial plan, it's likely designed to withstand market downturns. Are your goals still the same? Is your timeline intact? If so — stay the course. If you are a client of mine, we prepared for a downturn and have a plan in place for what to do - now is the time to act on that plan. 

Focus on What You Can Control

You can't control interest rates, inflation, or the markets. But you can control how you react.

  • Keep your emergency fund intact. Spend wisely.

  • Continue regular contributions to retirement accounts and savings plans if at all possible. Remember, there are buying opportunities now that weren’t there a few months ago!

  • Stay disciplined…even when it hurts.

Use Market Declines as an Opportunity

Bear markets often create chances to buy high-quality investments at lower prices. It's like a sale for long-term investors.

If you have extra cash or have been waiting to invest, now is the time to intentionally deploy that cash into your investment strategy. 

Don't Go It Alone

Money decisions get emotional in volatile markets. Having a trusted financial planner by your side can help you make thoughtful, objective choices when emotions run high.

If you're feeling anxious about your investments or future plans, let’s chat. A 20-minute conversation might be all you need to feel grounded again. 

Final Thought

Bear markets aren't fun, but they aren't forever. History has shown that patient, disciplined investors tend to be rewarded over time. The key is to endure the tough seasons and take advantage of the opportunity at hand so you're positioned to enjoy the growth that follows.

If you need a listening ear, a portfolio review, or a fresh perspective on your financial strategy, I'm here for you.

Let's schedule a conversation.

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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.