Markets are constantly fluctuating, meaning the possibility of a bear market is always around the corner. And although some investors cower at the thought, the shrewd understand that they are just part of a natural cycle.
Not only can you survive a bear market, but there are also many ways to gain advantageous positioning during this time, allowing you to reap the benefits and prosper. So, contrary to the belief of some neophyte investors, bear markets aren’t a problem. They are an opportunity.
A number of individuals have been convinced by the media that the best thing to do for their finances is sit tight, leave funds stagnant and avoid the bear market at all costs. However, this is immensely counterproductive. In fact, one of the world’s richest individuals, Warren Buffet, has famously made his immense wealth through investment in times like this.
Buffet has adopted a contrarian investment strategy, meaning he chooses to swim against the tide and go against current market trends: he sells when others are buying and buys when most investors are selling. This has easily put him within the top five richest people in the world, with a net worth of $72.6 billion.
Warren Buffet famously made huge profits during the 2008 financial crisis and was labelled the richest man in the world by the end of the recession. Buffett saw the credit crunch as an opportunity to lend to businesses who needed short-term capital and he is still reaping the rewards today.
Since then, he has received a $680 million profit from a loan to Mars, a 7-times return on a $120 million investment into Wells Fargo, a 5-fold winner on American Express and a $500 million dividend from Goldman Sachs.
Three other influential experts who have invested through previous crashes have also shared their top tips on surviving the stock market during these turbulent times.
- Jason Pidcock, head of strategy, Asian Income at Jupiter Asset Management: “I look for those with strong balance sheets. I also look for firms with a competitive advantage and the best example of a particular type of company in a given sector or geography.”
- Mark Mobius, founder of Mobius Capital Partners: “Global markets have been through some incredibly rough times and recovered. This is no different. Investors must take stock and stick with funds and companies that can be relied on to make a good recovery.”
- Paul Mumford, author of The Stock Picker and fund manager at Cavendish Asset Management: “Having seen many crashes, there’s a clear pattern that markets overreact to events and usually recover before the worst is over. The good news is that recovery is quick.”