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Bear Market Reality

December 27, 2018

It stinks! However, we’ve been here before, and after the recovery, we’ll be here again. The markets go up and down, and unless our investments are skewed away from a reasonably diversified portfolio we will recover again.

I checked my archives and most recently wrote about the market tanking last February and here is a link: https://partners-network.com/2018/02/06/the-market-tanked-does-it-mean-anything/.

On December 13th I posted a blog about some benefits of a falling market and while we would all prefer a rising market, there are some ways to take advantage of a stinky market. Here is a link to that: https://partners-network.com/2018/12/13/if-you-have-a-lemon/. I might note that the market did much more terrible after that posting.

So here is the reality: If you have a well-diversified portfolio, the greatest risk you will have is that of the overall market. That is ubiquitous and cannot be avoided as long as you invest in the stock market, or any market for that matter.

People invest because they want the market to go up; but many need to have the dividends paid. From what I can see, there is no danger of dividends dropping. As long as the dividend payments are maintained, there will be no changes in cash flow to those that rely on it and if you are accumulating the dividends then reinvestments can occur at lower stock costs which will further increase future dividends and expectantly will lead to greater wealth when the market recovers.

Hopefully your investments were made as part of a well-considered plan. Unless your needs or goals have changed, or there is a major change in the underlying economy, I do not see any reason to deviate from them because of the recent drop into bear market territory.

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