The end of the longest bull market in history came to a screeching halt with the quickest correction followed by bear market in history. Many investors were caught off guard. Prior to a bear market, investors should:
- Have defined financial goals
- Have a diversified asset allocation according to risk tolerance and a financial plan
- Stress test the asset allocation
- Rebalance frequently to take gains
- Always have an emergency fund
After a bear market, investors should remain disciplined and look for opportunities.
- Don’t panic – corrections and bear markets are normal
- Continue to rebalance back into stocks after the market declines
- There will be windows with low mortgage rates – Look for opportunities to refinance
- Unemployment will rise in the coming months providing opportunities to purchase real estate
- A limited number of stocks may provide opportunities with all market declines
- Make smart decisions based on data and not emotion
It is much easier for a prepared investor to whether a financial storm.