What Is Your Bear Market Plan?

If you have been invested in the market, you know strong bull markets are inevitably followed by principal-destroying bear markets. When the market is going straight up, as it has since the financial crisis, you become complacent and overconfident . “Hey…look at my portfolio, I am making money, I’m rich.” How quickly one forgets the wealth destruction that inevitably happens. The reality is some investors will be prepared, some will not.

At our firm, we tend to be on the more conservative side. Our client’s don’t want huge losses, so we take a different approach. Some will utilize Fixed Index Annuities to give them a floor under their assets, others will not. The stock market can be a very rewarding place to invest. But beware of Wall Street! The markets will giveth… and the markets will taketh away.

Do You Want To Give Back Three Years Of Gains?

When the dot-com bubble finally burst in 2000, three years of gains were wiped out. The final damage to principal was on the order of 51%, which is how far the S&P 500 dropped from the bull market peak to the bear market trough.

Eleven Years…Gone In A Flash
Similarly, after the property and mortgage bubble began losing air, the S&P gave back eleven years worth of gains. The final damage to principal was on the order of 58%, which is how far the S&P 500 dropped from the bull market peak to the bear market trough.

If We Know A Bear Is Coming
If it is inevitable a bear market is coming at some point in the future, is it not logical to start putting your protect-my-principal plans in place now? Obviously, the answer is yes.

Then why is it that when I ask potential new clients, what is the floor under your feet when the market collapses, the answer is usually a blank stare and the sound of crickets chirping.

Most likely, it is because people tend to work with ”accumulation” advisors, those buy and hold type stockbrokers that have little sense of planning or strategic investment management. Consequently, they expect you the investor to “hang in there” and “ride it out” as you watch your life’s hard work go to money heaven.

Once the declines begin in the early stages of the next bear market, stress levels will begin to rise dramatically. We all make better decisions under low stress conditions. Therefore, now is the time to begin formulating your “inevitable bear market plan”.

So, what will be your strategy to protect your portfolio when the inevitable bear market roars again?

Introducing Asset Lock
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Beginning in May, we will be rolling out a proprietary portfolio protection program called Asset Lock to our preferred clients.

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Asset Lock will ensure that we never get caught off guard by the destruction of the next market crash.

Learn more about Asset Lock by clicking here. And contact our office today to discuss your “inevitable bear market plan”.