What is a Bear Market and Should I Be Worried When It Happens? anchor wealth management rockford

When you turn on the news, you’ll hear a lot of investment talk. Frequently they use terms and jargon that they assume the person watching understands. Unless you are watching a beginner show, you are expected to know what the Dow Jones Industrial Average is, what’s buying on margin, and what’s the moving average. Most of us have at least heard of a bear market and its counterpart, a bull market, but do you know what that means? And should you be worried when it happens?

The financial advisors at Anchor Wealth Management have years of investment management experience. We can help you put together a financial plan that helps you meet your goals. We customize your financial plans and goals and use every tool to ensure you arrive at your destination. Below, we’ll take a brief look at what a bear market is and if you should be worried during one. Contact us for a free consultation today!

WHAT IS A BEAR MARKET?

A bear market is a market in decline. Specifically, the term is applied when stocks fall more than 20% from their highs. Markets are run by people, so as people feel and think, so goes the markets. Bear markets happen in a climate of a poor economic outlook. Investors believe the market is headed for a downfall, so they become cautious, not investing in some places where they otherwise might have. Bear markets are usually what you see in a recession. It’s counterpart, a bull market, is when prices see a steady upward trend. The origin of the term “bear market” is unknown, with some believing it has to do with how a bear attacks its prey, while others believe it has to do with historic selling of bear skins.

SHOULD YOU BE WORRIED DURING A BEAR MARKET?

The answer is it depends. Bear markets happen usually because something in the economy is off, such as with the housing crisis in 2008 and the Great Depression. However, because prices fall, it’s a great time to invest and buy stocks. The reality is that bear markets are a part of life. Not everything in your life can be on the upward trend. You have highs and lows, as does the market, because the market is composed of people. Bear markets are to be expected, especially if a bull market needs to be corrected.

The general and best advice with stock markets is to not panic and hold your own. This means that you don’t buy into economic whims nor should you follow the crowd. Historically, those who win in the stock market are those who buy and hold for many years despite price fluctuations. Remember that your investment plan is for the long-term, and a lot can happen in 20 plus years.

CHOOSE ANCHOR WEALTH MANAGEMENT TODAY

The financial advisors at Anchor Wealth Management believe in setting a financial plan and the steps to get there. We believe if you stay the course that no matter which way the wind blows, you will arrive at your destination. You may face some storms here and there but eventually you’ll get there.

Our holistic approach includes using every avenue to meet your financial goals. We offer life insurance, long-term care insurance, investment and wealth planning, and more. We invite you to give us a call for a free 15-minute phone call just to get a general idea of where you are at. Then one of our fiduciary advisors will sit down for a free consultation and begin to chart your course with you. Start your journey with us, and call one of our offices in Rockford, Lanark, or Freeport today!