Navigating the Emotional Roller Coaster of Bear Markets
Bear markets are a roller coaster of emotions. At times, it’s hard to even recognize whether you’re in one or not. This uncertainty arises because bear markets don’t always follow a single pattern—they come in various forms. Consider the sharp one-month decline during the 2020 COVID-19 outbreak, marked by sudden rebounds. Amid the panic, some market participants were calling for markets to be shut down(link), only to later dismiss it as a temporary event. Or think back to the slow and grinding decline of 2017-2019, where the market slipped quietly and relentlessly.
Bear markets or corrections are often selective in nature. Not all stocks fall equally—some segments are hit harder, especially the ones that led the previous bull run. Experiencing a bear market is a unique journey, depending on when you entered. Those who invested recently may see their portfolio value drop like pins in a bowling alley. Long-term investors, on the other hand, experience a different kind of pain: their wealth erodes, and they realize they haven’t fully capitalized on the prior bull market either.
Investing during a bear market brings its own set of complications. If you invest as prices fall, it’s nearly impossible to time the bottom. You might witness prices drop even further after you buy, leaving you disheartened. And if you did time it right, there’s often regret for not having purchased more. After making an investment, it’s easy to second-guess yourself when you see the stock drop the very next day, making you feel foolish for not holding out longer.
During these times, you may find yourself doubting everything—your analysis, business models, the compelling growth stories, and the next hot sector that’s suddenly out of favor. It’s disheartening to see the market’s brutal price action slicing through the narratives you once believed in, leaving you feeling disillusioned and questioning your decisions.
But as seasoned investors often say, “this too shall pass.” If you can endure the pain and stay committed to your investment strategy, you’ll emerge stronger. It’s in these challenging times that your resolve is truly tested, and your ability to maintain discipline can set the foundation for future success.
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