Ways to make money in bear market

May 29, 2022 12:25 AM AEST | By Toshiva Jain
 Ways to make money in bear market
Image source: Pixabay

Highlights

  • A bear market is one when prices of stocks go down. The market becomes hyper pessimistic, and it gets difficult to predict when share prices will go up again.
  • Most people see bearish markets in a negative light; however, there are ways in which one can make money even during a bearish pull.
  • Investing in high discounted stocks of generally high yielding companies is a good option during a bearish pull.

Sinusoidal trends are a share market reality and market cycles are extremely dynamic. Thus, every wise investor needs to be apprised and ready for market changes. Almost everybody likes a bull market, but if you want to stay in the game during the bullish period, quitting in the bearish time frame may not be the best investment choice. And, what’s investing life without some change and risk?

Share markets go from bullish to bearish phases depending upon several factors that affect the prices of securities and stocks. So, first, let’s understand the two sides.

 Stock market

Source: Pixabay

GOOD READ: URW, MGR, DXS, SCG - How are these property stocks acting?

Bullish and bearish sentiments

How can you make money in a bear market?

A bullish market is when the prices of stocks rise- the stock market booms, companies and their stakeholders make optimum profits. This is when people sell off their investments to make maximum returns.

Thus, all the short term and long-term investors await the bullish period to realise the return on their investments. However, when there is a bullish sentiment, there is deemed to be a bearish spell looming. So, what happens during a bear pull? - A bear market is such when the prices of stocks go down. The market becomes hyper pessimistic, and it gets difficult to predict when will the prices go up again.

The recent market downfall was experienced in several countries right after the Russian invasion. So, when the prices of each stock go down, the expectation for return on investments also goes down. Thus, people often make bad decisions in such scenarios by selling off their stocks in fear of losses and losing more money.

Most people see bearish markets in a negative light; however, there are ways how one can make money even during a bearish pull. Let’s have a look.

How to make money in a bear market?

Choose which stocks to buy: The most critical decision in a bearish pull is choosing which stocks to buy. For instance, big companies, which are generally high yielding, sell their stocks at high discount rates to generate more money during a falling market. Thus, investing in such stocks may be a good choice for investors.

Prioritise dividends: Even if the final prices of stocks are going down, the company is still earning profit and subsequently offering dividends. Investors should therefore buy stocks of such companies to receive dividend income even in times of a bearish pull.

INTERESTING READ: WES, WOW, COL, EDV: How are these ASX consumer stocks performing?

Critically analyse timelines: The most crucial aspect in a bear market is to investigate when the right time is to buy stocks. There are two mistakes people make here- they either purchase new storks too early, so if the prices of the stocks keep falling, they incur losses. Secondly, at times, people wait too long to buy, and if the prices start rising, the opportunity to make maximum profits is gone.

Don’t panic: Lastly, if you are a long-term investor, you shouldn’t worry about bear market losses. The only thing to ponder upon is whether the stocks you have in your portfolio are good in the long term. Because good stocks generally come out well from the bear market.

FINAL READ: CBA, NAB, WBC, ANZ: How are ‘Big-4’ bank stocks performing post elections

A bearish market is a market reality and escaping its effects is impossible. Thus, all investors should be ready to bear the pull of the bearish time zone in the market. Besides, making money is quite possible during a bearish pull. However, people need to be cautious, smart, critical, and patient while investing in the market during the bearish pull.


Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.


AU_advertise

Advertise your brand on Kalkine Media

Sponsored Articles


Investing Ideas

Previous Next
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.