There’s room for guarded optimism. It may be hard to imagine the market recovering after the speed of this decline, but it will happen…eventually…in time.
And the track record is there.
Every stock market crash in the U.S. recovered. Every recession in this country turned into a growing economy. Every bear market ended. So guarded optimism.
If you’re sitting on cash, waiting for a signal to go all-in in this market, you won’t find it. Those things only show up in the rearview mirror. At some point, you have to pick your moment, commit to it, and average in.
Break your cash position into chunks, and buy some stocks each week or month — whatever you’re most comfortable with — until it’s gone (if your income allows it, now is a great time to increase retirement savings). That way, if you’re wrong about the bottom — which you will be — your money goes further. You buy more shares as stock prices fall.
Finally two reminders: don’t invest what you can’t afford to lose in the next 12-24 months. And do not borrow money to invest without fully understanding the consequences if you’re wrong.
The art of surviving in a bear market is courage, patience, and humility. A willingness to look wrong in the short term is what sets the successful investors apart.
Those same successful investors have also offered some helpful tips over the decades worth heeding on how to survive a bear market:
Every economic recovery since World War II has been preceded by a stock market rally. And these rallies often start when conditions are grim. — Peter Lynch
***
One of my life principles is that the only way you can live life is by dealing with what is, and not with what might have been. So that’s the way I’ve tried to deal with setbacks. — John Bogle
***
The most important lesson an investor can learn is to be dispassionate when confronted by unexpected and unfavorable outcomes. — Peter Bernstein
***
“This one is different,” is the doomsayer’s litany, and, in fact, every recession is different, but that doesn’t mean it’s going to ruin us. — Peter Lynch
***
It’s absolute cockamamie crazy to sell stocks after they drop. Instead, you should say, “Today there’s a first-rate bargain and I’m buying.” — Charles Ellis
***
Discrepancies — and hence opportunities — in securities originate most often when events move faster than quotations. — Benjamin Graham
***
People who exit the stock market to avoid a decline are odds-on favorites to miss the next rally. — Peter Lynch
***
If you can invest your money under fair conditions, in fact under attractive specific conditions, I think one certainly should do so even if the market should go down further and even if the securities you buy may also go down after you buy them. — Benjamin Graham
***
I’ve found that when the market’s going down and you buy funds wisely, at some point in the future you will be happy. — Peter Lynch
***
Survival as an investor over that famous long course depends from the very first on recognition that we do not know what is going to happen. We can speculate or calculate or estimate, but we can never be certain. — Peter Bernstein
***
Experience in former markets indicates that just as they are too high in bull markets, they get too low in bear markets. — Benjamin Graham
***
In investing, nothing is certain. The best investments we have ever made, that in retrospect seem like free money, seemed not at all that way when we made them. — Seth Klarman
***
As soon as you realize you can afford to wait out any correction, the calamity also becomes an opportunity to pick up bargains. — Peter Lynch
***
After a stock market decline, people may perceive more risk than before when, in fact, the decline may have taken some of the risks out of the market. — Robert Shiller
***
Most people who have been really successful in the securities markets say the same thing — that they’re not smart enough to get into the market and out of it. So they tend to remain more or less in the market at all times. — Walter Schloss
***
My experience is that when people want to give something away at a ridiculous price because they have to, not because they want to, that’s a good time to buy. — Seth Klarman
***
I am an exponent of the philosophy that the main objective of common stock investment should be pricing, not timing; and by pricing I mean the endeavor to buy securities at prices which are attractive, letting timing take care of itself. — Benjamin Graham
***
We consider for each of our investments not only whether a security is undervalued but why it is undervalued. If the reason is that there are uninformed or emotional sellers, we become more comfortable. — Seth Klarman
***
The general state of business thus does not forecast the course of stock prices except in the apparently paradoxical fashion that great prosperity affords an advantageous time for selling stocks, extreme business depression an opportunity for purchase. — Philip Carret
***
The first task of the bargain hunter is to narrow the field and separate the solid prospects from the ones that are counting on hopes, prayers, and miracles. — Peter Lynch
***
It’s good to buy a large company with fine businesses when the price is beaten down over worry about one problem. — Henry Singleton
***
The very existence of doubt creates the conditions for a big gain in the stock once the fears are put to rest. The trick is to put your fears to rest by doing the research and checking the facts — before the competition does. — Peter Lynch
***
Sound common stocks, bought at sound prices, are always good investments. — Benjamin Graham
Last Call
- Your Money: A Hub for Help During the Coronavirus Crisis – NY Times
- Common Enemies – M. Housel
- Three Crisis Strategies to Avoid – Movement Capital
- A Viral Market Meltdown III: Pricing or Value? Trading or Investing? – Musings On Markets
- What’s Causing All the Panic Buying & Selling of Stocks? – A Wealth of Common Sense
- When Will Stocks Recover? – J. Reckendthaler
- What Happens After the Stock Market Falls? – Irrelevant Investor
- Mapping Decline and Recover Across Sectors – McKinsey
- Memo to the Investment Committee: Dare to Be Different – J. Montier
-
This Too Shall Pass – R. Arnott
- Dan Rasmussen: Investing Through a Crisis (podcast) – Invest Like the Best
- How The Leaders Of Four SME Businesses Are Weathering The Coronavirus Storm (podcast) – Acquirer’s Multiple
- When the System Breaks Down, Leaders Stand Up – R. Holiday
- Bill Gates AMA about COVID-19 – Reddit
