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What’s up guys!
How’s the week coming along?
Bit of a rollercoaster so far for your truly, work’s been pretty brutal these last couple of days.
But it’s harder if you don’t keep going right!
Fight the good fight, it’s what we all must do.
Speaking of the good fight, a quick congratulatory word for my friend Bugzy, who was married to the girl of his dreams this week.
The one who he can finally “play the piano and stroke my baby’s hair”.
I’m just happy that he’s found the one, because if you saw him just 2 years ago… sitting by himself at the foot of the stairs in our local shopping mall… well… that’s another story for another day.
(Closes eyes in memory of such harrowing times).
But ENOUGH, because today, today we continue our talk on BEARS.
Specifically on “how to survive a bear market” (read part 1 here).
We’ve discussed “step 1 – don’t panic (and shut out the noise)“, we’ve talked about “step 2 – think (wo)man, think”.
The next step is to:
Step 3 – Survive the initial wave.
Usually bear markets, in the major asset classes are a prelude to a deterioration of economic conditions. This is because market movements are just people’s expectations on value at a certain point in the future.
A bear market represents a significant (20%) drop in overall market conditions.
Whether in the housing or stock market, a drop of this magnitude is felt by everyone.
Soon enough – it cascades into the overall economy as a whole.
In which case, for most of us – it’s all about SURVIVAL baby.
Making ourselves invaluable to our 9 to 5, or making sure our customers are well serviced in our business, or setting up a new business – whatever it is, you have to survive the downturn!
Oh man, I’ll won’t ever forget during the last brutal GFC – as a fresh-faced, fresh-eyed, fresh graduate working in financial services.
What an eye-opener that was!
I will always remember looking into a manager’s eyes during the uncertainty, his face etched with worry, with neither of us knowing whether we still had a job.
I will always remember over-hearing a grown man, sobbing his heart out because his job no longer existed, in the next meeting room.
I will always remember that conversation with my colleague who confessed to me, she didn’t know how she’ll feed her 1 year old if she loses her job.
You know, I often reflect on this time – I am incredibly lucky and unlucky to have gone through the GFC at such a formative time in my personal and investing career.
Lucky in the sense that I’ve experienced an economic down-turn the worst since the Great Depression so early on as to have time to recover and learn.
Lucky in the sense that I wasn’t newly married with a 1 year old at home.
Lucky in the sense that I didn’t have two tweenage kids with private school fees and a stay-at-home-mum.
But above all, I feel lucky in the sense that I survived through it (not unscathed, read here as to why) but stronger, better and hopefully wiser.
As for being unlucky… well… you figure it out.
Ya know, it’s so easy for them to tell us to “invest when there’s blood in the streets” or to “dollar-cost average” or to be “greedy when others are fearful and fearful when others are greedy” but yknow – try doing it when you’re going through the storm.
That’s why protection of what you have is absolutely PARAMOUNT during a bear market.
Nothing else matters.
Just survive it.
Was gonna write “Step 4” but I think “Step 3” is one of the biggest and most under-rated factors on how to survive a bear market – the fact that you have to go through it, keeping what you have. I’ll think I’ll just leave it as a stand-alone post.
So until next time, have a great week everyone!
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