Things to do instead…
Imagine you are out in a dense forest without any weapons, but you have a muscular friend with you. Then imagine an angry growl and realize you are between a very angry grizzly bear and her precious cubs. Now consider your options: climb a tree, run or stand and fight. Climbing a tree might work, but probably not. Standing and fighting seems rather foolhardy. It seems you must run or die, because your muscular friend is no match for an angry bear. You now only have one good option for survival: out-run your friend.
What should you do if you face a bear market and all your options seem futile? Can you run? Yes, but history has proven that panic selling is almost always certain failure. Can you fight a bear market? No, there is no good escape strategy that works, in my opinion. Is there anything can you do? Let me tell you what I do and am doing.
1. Remember previous bear markets. They are usually very short and very temporary.
2. If you have dividend income, remember you can reinvest and buy more shares at a lower price, thereby increasing your long-term dividend income growth. This is a powerful engine. If you sell your investments, you are selling income-producing assets.
3. Remember and review your written plan. If it says, “don’t panic” and “don’t sell” during a bear market, then don’t panic and don’t sell.
4. If you are a Christian, then don’t worry. Remember God cares more about you than you care about yourself. God is Sovereign and God is GOOD. He loves his children more than I love our children and grandchildren. Remember the following:
“Therefore, I tell you, do not be anxious about your life, what you will eat or what you will drink, nor about your body, what you will put on. Is not life more than food, and the body more than clothing? Look at the birds of the air: they neither sow nor reap nor gather into barns, and yet your heavenly Father feeds them. Are you not of more value than they?“ Matthew 6:25-26 (ESV)