Investments in Bearmarkets
Investments in Bearmarkets!
When the S&P 500 entered a bear market in June 2022, a bitter smile sat on the faces of many investors. But this is not the first time: since 1928, the S&P 500 has already experienced 26 bear market phases.
Bear markets are part of normal market trends, of relatively short duration (especially compared to bull market trends) and can offer good investment opportunities. They occur when the market falls at least 20 or more percent from its last highs.
When investing during the bear market, there are some rules to follow. When choosing the “right” stocks, one should focus on quality. In other words, choose companies that have a real competitive advantage, whose balance sheets are rock-solid, and that aren’t overly indebted.
It is also important that you build your positions over time. No one can predict when the market will bottom out! Focus on recession-proof sectors.
So-called “bear market stocks” appear to be attractive to investors and can be found in defensive sectors such as consumer staples, consumer durables and healthcare.
Healthcare is definitely a safe haven as markets turn south.
In this sector are highly trendy, such as Pfizer, Eli Lilly or even insurance companies, such as UnitedHealth, Anthem and Centene.
Another unpopular consequence of a recession is that many consumers are cutting back on their spending. However, since people still have to buy staples, household goods and hygiene products, demand usually holds up better than in other areas of the economy.