Run or Climb a Tree or Play Dead?
According to the National Park Service, “Seeing a bear in the wild is a special treat for any visitor to a national park. While it is an exciting moment, it is important to remember that bears in national parks are wild and can be dangerous.” You think?
The first thing suggested is that you avoid an encounter. That certainly makes sense. I should identify myself calmly, and say, “Hi bear, I’m Wayne.” I should stay calm. (Really? OK, I will try.) I should pick up small children. Don’t run, and hike in a group. Don’t run. Don’t climb a tree ‘cause bears know how to do that better than you do. Leave the area. But don’t run. Did I say, “Don’t run?”
All of these things seem sensible when encountering a real bear. Investors also encounter bears. They are all around you. They tear up the perceived value of the companies, ETFs, mutual funds, bonds, and real estate. What should you do when you see a bear market?
Don’t Run
You cannot outrun a bear market. Don’t sell because that just feeds the bear and you don’t want to make the bear stronger. Today the bear will be strong, but don’t run.
Count Your Dividends
So far this month, we have received over $7,000 in dividend income. Bears sell and that causes their dividend income to stop or be dramatically reduced. Most of the time most companies which pay a dividend continue to do so. Bear markets may cause some to suspend or reduce their dividend, but most companies will not take that dramatic action. Stay calm.
Don’t Shout at Your Broker or Adviser
They are doing the right thing if they tell you to do nothing. If you consider me to be your adviser, then here is the right thing to do: Stand still where you are and don’t make a lot of noise. Speak calmly and ask questions.
Buy More Good Stuff
If you have extra cash, but more of the good-to-great investments you already have, especially those that pay an increasing dividend.
Help Small Children
Tell the frightened investors around you who have not been investing as long to stay quiet and calm.
Take a Nap or Help Someone Else
I am in my 70’s now, so when I need a nap, I take a nap. The market is going to do what it is going to do whether I am awake or asleep. Also, I have plans for every day of the week to help someone. I am helping a friend wade through some financial questions today, and I hope to help another friend move tomorrow.
Trust God
Some of my readers are people of faith. That is, we trust in the living God, Creator of the heavens and the earth. He sent His Son to rescue me. Those he rescues he does not abandon. He takes care of sparrows. I have never seen a worried sparrow. The ones just outside our front entrance will be busy caring for their little sparrows. Rest in your Father’s care.
“Fear not, therefore; you are of more value than many sparrows. So everyone who acknowledges me before men, I also will acknowledge before my Father who is in heaven, but whoever denies me before men, I also will deny before my Father who is in heaven.” Matthew 10:31-33
“Keep your life free from love of money, and be content with what you have, for he has said, “I will never leave you nor forsake you.” Hebrews 13:5
Full Disclosure
I am not afraid. I am a follower of the Lord Jesus Christ. He promised never to leave me or forsake me.
LINK: Bears and the NPS
Know Your Flocks & Herds 