What smart investors do in bear markets? Is now the time to panic?
How Smart Investors Navigate The Bear Markets
“This is an interesting period for the market. I’ve been involved in markets for over three decades and I’ve seen bear markets. But for many investors, this is a first. I can’t tell you how many times I’ve heard, ‘buy the dip’ in the last decade. In the back of my head I kept thinking, at some point that will not work. And while it took a lot longer than I expected, you’re now seeing what happens when you buy a perceived dip in a bear market.
Q2 2022 hedge fund letters, conferences and more
Smart, or seasoned, investors understand bear markets are simply a part of the cycle. Bear markets follow bull markets and bull markets follow bear markets. That’s the nature of the business. So if you’ve been around a bit, you know this isn’t a time to panic and, if anything, this is a great opportunity.
Longer term investors are finally getting a chance to pick up assets at much more reasonable price levels. So whether you’re adding to existing positions or getting into new ones, this market is like Prime Day for assets.
If you’re an options or futures options trader with a shorter time horizon, the market volatility is what you want. Option premium is rich relative to where it’s been the last several years. That just means you’re getting paid more for the risk you’re assuming when selling options. That creates an abundance of opportunity for self-directed retail traders.
No matter what your time horizon or trading style, I think the most important thing is to not panic and keep your size small. Having some money on the sidelines is always a smart move. But simply understanding that prices go up and down is key. Don’t get overly emotional and make emotion-based decisions in an emotionless market. Just stay the course, whatever that means for you.”
About tastyworks
tastyworks is an online brokerage platform built specifically for options traders. The up-and-coming online broker is a subsidiary of tastytrade, one of the fastest growing online financial networks in the world. tastyworks was designed by the founders of thinkorswim with sophisticated functionality for complicated options trades and strategies in mind. It has a do-it-yourself approach and provides the technology, education, and support to succeed more easily on your own.
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