Welcome to a New Smart Money video on how to invest in a
bear market or investing in a bear
market for profit firstly I'd like to
quickly cover what is a bear market
we've had several in recent years in
1973 through to 1975, 2000 to 2002 as
well as 2008 they were bear market and
if you look at the charts which I am
flashing up on the screen you can see
the price is generally going down the
page it is that simple a bear market is
nothing more scary than the prices on
average of everything it's getting less
and less and less
this means that stocks with less today
and they were yesterday now in a bear
market you certainly can find stocks
that perform well and buck the trend so
to speak however it is quite difficult
and it feels like swimming against the
tide I'm going to share four key
investment strategies on how to invest
in a bear market but I do want to say
this is just my opinion so please as a
disclaimer now this is just my opinion
you need to make your own decisions you
need to choose how you invest your money
for yourself. Key number one on how to
invest in a bear market is to realize
that bear markets do not exist
everywhere and therefore you have
opportunity to move your funds from the
current bear market which is getting
less and less and price to something
which is actually performing you just
need to think about all markets as
simply a mechanic of price not to worry
too much about what it is now I know
this is a very technical and not a
fundamental approach to the market but
essentially if prices are going on you
can then apply your fundamental approach
if that's the way that you invest to the
market but the most important thing is
to find a rising tide it is far easier
to succeed where all the prices are
going up so key number one and how to
invest in a bear market is get out of
the bear market get into other asset
classes go out of stocks go into gold go
into bonds look and see what is
performing. Key number two in how to
invest in a bear market is to simply
move your money to cash now I hear
you're saying wait if I'm not invested
and how am I going to make money but I
would like you to think about this what
if the market that you were invested in
or that you were looking to invest in is
going to decrease 10 to 20 percent over
the next two years whereas if you held
cash inflation runs in most countries at
two to three percent what this means is
that you will lose 2 to 3 percent on
cash so by not being invested you don't
protect your cash and you lose 2 or 3
percent assuming if you get some sort of
savings account perhaps you might be
able to get one of those percent back
however if you had have invested it in
the beer market as prices kept going
lower and lower and lower you would have
lost 20 percent of your money now do you
understand that people say you should
average down but I don't think that is a
wise strategy I think it is better to
pull your money back and to hold it
weigh it up and think that one through
carefully for your portfolio. If you're
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useful as well as being about how to
invest in a bear market. Key number three
on how to invest in a bear market is to
look for dividend stocks this is
actually a very productive approach in
history we see that top paying dividend
stocks outperform the market by four to
five times that's a significant add
performance in terms of price however in
a bear market we know prices come down
so you're investing in that company for
the dividends that they're going to pay
you if you're doing this for the short
term there's probably not a good
strategy for a year or two you might
find that the decrease in price far
exceeds the return on dividend that you
get however if you want to be in the
market and you do want to be invested in
something find the high dividend-paying
stocks because you are gonna get
something back and history shows us that
the probabilities are in our favor that
they will outperform other stocks in the
market you won't necessarily get the
picks that just zoom off the page
upwards but you are gonna get something
which has a high
probability of giving you an out performing
result of four to five times the average.
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this and the last one perhaps
controversial on how to invest in a bear
market is not to invest at all rather to
trade it this means to learn what it is
to short the market and if you're able
to understand how to short the market
and you are willing to look at things in
a shorter timeframe you're able to aim
to sell something you don't have and buy
it back later for Less capturing the
difference there's very similar to how
you buy shares in a long perspective
where you buy something today and you
sell it for more later and you capture
the difference you're just literally
doing the opposite it's like an IOU note
and so I'd say the last and final tip is
don't invest trade
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on how to invest in a bear market I hope
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