Bear Market Strategies, undertaken by investors can differ in many ways. At the time of bear market, while many people convert all their shares in to cash, some just sit and relax as they hold well-diversified portfolios. Bear Market Strategies refer to the strategic options that one can undertake in a bear market situation.
Different people can take different strategies, in order to fight the bearish market condition, on the basis of their individual investment behavior.
The strategies that people can opt for in a bear market are the following:
The option, that most of the people undertake is the option of converting the shareholdings in cash at the time of bear market. This step is taken by the investors as they loose their confidence in investing at the time of bear market and they do not want to loose money.
If people go for ultra-conservative type of fixed income option, then they can save themselves from being affected by the bearish market conditions. If a person can create a diversified investment portfolio, holding intermediate bonds, government savings bonds, short-bonds and inflation protected securities, then he can avoid the negative effects of a bearish market condition.
The investors, who buy shares and hold them for long term, are less prone to suffer from losses because of bear market situation. But, the people, who are active stock traders, believe in investing in all types of market as they involve in studying market psychology and they know the tricks that work in a bearish market condition.
Although surprising, but true that one strategy in bear market situation can be of doing nothing. This strategy can be proved as the best one especially for the passive investors. The people who are holding a well-diversified portfolio, can just sit back and relax at the time of bear market situation.