Jonathan over at MyMoneyBlog shared some good weekend reading on suriving a bear market. He also uses a neat trick of taking 0% APR credit cards to put money into high yield savings accounts. His blog is an interesting daily read and Survive A Bear recommends it.
Yahoo Finance has just started a series of articles 40 Stocks for the Long Haul which kicks off with an article with some more great recent quotes from Warren Buffet: “Be fearful when others are greedy, and be greedy when others are fearful,” he wrote in an opinion piece in The New York Times. “Bad news is an investor’s best friend,” he added. “It lets you buy a slice of America’s future at a marked-down price.”
As Survive-a-Bear keeps saying: If you are in it for the long haul, be an aquirer. The article goes on to list Five Criteria for evaluate stocks for a long term purchase in this bear market:
Judy Alster over at rightside advisors wrote a good article on how dividends can take some of the sting out of this bear market. Some interesting points:
Some of your investments should be giving you reasonably reliable returns that don’t require you to be constantly monitoring your holdings — investments that will, in fact, pay you just for showing up. Dividends are how a company signals steady operating cash flow and legitimately returns earnings to its owners.
and
When you buy a dividend-paying stock, you get periodic payments and your portfolio gets some insulation against a falling market. Over the last 12 months the S&P 500 index has declined over 37%; in the same period the Mergent Dividend Achievers Index (DAA) has declined 31.5%, the PowerShares Dividend Achievers ETF (PFM) is down 30% and some high-yield dividend indexes are down even more. The 21st Century Investor Dividend Portfolio is down 21%.
Survive-a-Bear’s take on this is that you can use the dividends to purchase discounted growth equities now while the price is low, without having to put additional cash into the volatile market.
AllAfrica.com brings us this article with a perspective on investing niche can help amateur investors not only survive, but capitalize on a bear market like the one the NSE (Nigerian Stock Exchange) is currently undergoing.
A market analyst and investment adviser, Oladipo Adewumi, said the best approach to the market in the bear period is to put money in those equities that have been beaten by the bears but which still parade strong fundamentals.
Such stocks, according to him, cut across the different sectors of the market.
“One of the ways to identify them in any industry or sector is to compare the equities current prices to the trailing, quarterly or forward earnings per share. The higher the earnings per share and the lower the share price of a particular equity, the better the stock is for the investor, all things being equal” he added.
It isn’t surprising to learn that these similar strategies are just good fundamentals that are applicable regardless of geography since worldwide, we are experiencing down markets.
Sandra Hamilton writes
Until the government gets out of the way and lets the free market be free, then investing in the stock market becomes simply a quest of trying to decide what the government will do next. Unfortunately, the government is a lot more irrational than the general populace and its politicians have agendas we can never know about. I can make a prediction about human action; I have no idea what the government will do next.
What do you think? Are you holding your money out of stocks until the volatility of the government’s involvement is settled?
Here’s a classic mistake being made by average non-pro investors in this market: Actively trading. Survival in this market is going to mean diversifying across several asset classes with broad market index funds and sitting tight. If you are investing for the long-term 10, 20, or 30+ years this is THE strategy to use. If you need your money within 6 years, say for retirement, you really should pull out of the stock market.
And just in case you think that picking companies with “good governance” will be a surviving strategy, start here, you may be surprised.
What a wild and crazy ride today. The Dow down near 700 points at one point today and then rallying back to close down only double digits creating the largest intra-day range in history. For us long term investors, a volatile day like this doesn’t matter much in the long run, unless of course you are buying up stocks while while the market is down these last weeks.
In an article today in Business Week entitled Stocks: Beyond the Panic, Mark Arbeter talks about how the upcomming months of November, December, and January are historically the best three months of the year. If you believe that the market is at its bottom, now is a great time to start accumulating stocks.
Forbes.com has a nice “In Pictures” slide show feature detailing five bear market hedges and their results. It is an interesting look at some investment categories that can help you survive the next bear market.
We all know that it is just a matter of time until the next bear market. Some analysts expect it to come sooner rather than later. Either way, the smart investor has a strategy in place to not only survive the coming bear market, but capitalize on it. Rex Moore of the Motley Fool lays out one such great strategy.
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