Bear Market or Correction?

Does it matter?

As we close the year out at The Part Time Investor there are a lot of headlines about the U.S. and world economies heading towards or already in a Bear Market; some pundits are more positive calling it a correction. The world markets have definitely been getting pummeled to say the least.

While it has been tough to see some of my investments drop as much as 20% in the last two months I remind myself it really doesn’t matter. I’ve shed the companies from my portfolio that I am not happy with and am still investing in the companies that are part of my strategy. I should note that I am 35 years young and I am in the wealth building stage of my life. It is during these market down cycles that I gain an advantage for larger returns on investment for my target time horizon.

Pro’s:

  • Stocks become cheaper and I have more buying power.
  • Stocks come back down to or below their intrinsic value (making them more valuable to me the investor).

Con’s

  • Stocks become cheaper and if I need the money for an emergency I will lose my ass.
  • Public sentiment tends to drive theses cycles. Pessimism breeds pessimism.

Right now the economy is nothing like it was during the Great Recession. Companies aren’t closing and people aren’t losing their jobs. Right now I make just as much money today as I did yesterday, and cheaper stocks now means more shares. Unless you are already in retirement or counting on your investments immediately then this downturn can be viewed as a positive.

Good luck and happy investing!

Advertisements

2 thoughts on “Bear Market or Correction?

Add yours

  1. Great post Greg. Great minds must think alike, because I am actually working on a post about the market cycle now and will publish it in mid January. I like your long perspective and outlook on the stock market. Keep it coming.

    Like

    1. Franco, thanks for reading! I’m looking forward to your article. It will be interesting to see how much changes in the market the next couple of weeks and if our points of view change considering how volatile things feel right now.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Create a website or blog at WordPress.com

Up ↑

%d bloggers like this: