7 Simple Tips for Surviving and Thriving Through Every Bear Market

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If you’re invested in the market, I feel your pain.


My own investments are down too.

As of this writing, the S&P 500 is still (barely) in bear-market territory, 20.3 percent off its Jan 3, 2022 peak. The NASDAQ is firmly in the grip of the bear, at 31 percent off its Nov 19, 2021 peak.

Since the overall market cap of the S&P 500 is about double that of the NASDAQ, we can say the market is about 24 percent off.

With Atlanta Fed estimates that the US economy contracted in the second quarter, we’re more than likely in a recession. Official confirmation may take months, but it seems unlikely to change things. 

And as I wrote before, bear markets tend to be over 5 percent deeper and last twice as long when the economy enters a recession at the same time relative to when it keeps going strong.

I asked Danielle Miura, CFP®, founder and owner of Spark Financials what her best advice is for investors in our situation.

What she said made perfect sense.

7 Things to Keep in Mind Through Bear Markets

If (unlike me) you invest in individual stocks, Miura points out:

  • Companies that normally do well in recessionary periods are ones that have strong balance sheets and sell consumer staples.
  • Companies with high debt-to-equity ratios may struggle to continue paying on their debt when revenue drops, as may happen in a recession.

But what about those of us who stick to mutual funds and ETFs? No worries. Miura’s advice covers us too.

Her first tip for us is one I’ve written about many times myself — avoid panic selling. 

As Miura puts it, “Don’t make any drastic moves to your stock portfolio in a bear market. Investors often make the mistake of selling when the market falls and/or making frequent trades on their accounts.

Another point we completely agree on is that trying to time the market, picking the absolute bottom to enter the market, and the absolute top to sell, is a fool’s errand.

Attempting to time the market requires a functional crystal ball. Since you don’t have one and can’t predict the future perfectly, just pick a time to buy and do it.

Related to that, Miura agrees with Warren Buffet (and me ;-)) that bear markets are a great opportunity to those of us still in the accumulation phase, saying, “A bear market gives you the opportunity to buy stocks at lower prices, which can help increase your future gains.”

As we all know, however, buying when the market is down a lot and seems likely to keep dropping is emotionally challenging. 

To address that, Miura suggests, “The least stressful way of investing into a bear market is dollar-cost averaging. That’s when you consistently invest the same amount each month. 

“As the market shifts, you’ll buy fewer shares when prices are high and more when they’re low. On average, that lets you buy at a lower overall cost, increasing your long-term returns.”

If you want to turbo-charge your long-term returns, here’s a pro tip from Miura, “If you notice your portfolio shifted relative to your allocation, it might be time to rebalance. 

For example, if your preferred stock allocation is 70 percent, with 30 percent in bonds, stock-market losses may have shifted that to say 60 percent stocks and 40 percent bonds. If so, consider selling some bonds and buying more stocks to return to your original allocation.”

Especially that last bit is emotionally hard. When we get burned, we’re wired to avoid further pain, not double down on what burned us. Nevertheless, for long-term investors, that’s the best thing we can do for our portfolio’s success. 

If you do that, you’ll be buying low, in the expectation that in a few years the market will come back (as it always has in past bears), and you’ll make an even bigger profit.

While nobody knows what the market will do next, I find it hopeful that the S&P 500’s Cyclically Adjusted Price to Earnings (CAPE) ratio (a.k.a. Shiller ratio) is out of the extreme danger zone of more than double its long-term average of 17. According to YCharts, it’s now at 28.7. Still 69 percent above average, but far below its recent reading of near 40.

The Bottom Line

The above tips are simple, but no less powerful for their simplicity. Also, simple doesn’t equal easy, especially in the emotional sense. However, if you want extraordinary results, you can’t do the ordinary thing like most people.to the writers you read…


This article is intended for informational purposes only, and should not be considered financial, investment, business, tax, or legal advice. You should consult a relevant professional before making any major decisions.

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