The last quarter of 2018 was brutal for investors. Trade wars, interest rate hikes, a glut of oil reserves; among other variables; all conspired to a depressed stock market. After a record bull run many pundits were calling for a bear market to take hold. Two weeks into the new year nothing has really happened except that the market has appeared to stabilize. (Technically the government is shutdown but this has not affected the market yet.)
What does this mean?
In my opinion we just saw an end of year market correction. Already my portfolio has been making slow incremental increases. Furthermore I’ve been buying while prices are well below their 52 week highs.
How I am getting through a market downturn:
- Dollar Cost Averaging (DCA) I kept making weekly deposits into M1 Finance and Acorns where my money was being auto-invested. My cost basis for all my holdings are now lower creating opportunity for larger returns.
- I reviewed all the companies I had a stake in. I made sure they are still aligned with my investing strategy and philosophy. I had mentioned it before but I finally dumped a company that I was not happy with. I took the loss but reinvested the money in a much stronger company.
- Ride it out. Historically every downturn has upswing. Charting the DOW and S&P 500 indexes will show that in any period a dip is followed by slow and steady gains generally surpassing previous highs.
While my optimism that we avoided a bear market may be wrong I do know that investing consistently over time will set me up for future wealth.