Bear Market: When Will It Be Safe To Invest In Stocks Again?

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Investors should always expect some turbulence when it comes to navigating their assets through tough economic times.

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However, these are unusually tougher times than we are accustomed to. Last week, the S&P 500 was down 21% since its most recent peak in January, and its benchmark index is at its lowest level since March 2021, per CNBC Select — down 22%.

The economy has officially crossed into bear market territory and will be susceptible to all the pitfalls associated with such a financial state of affairs. How long it will last cannot be answered, but what can is when it will be OK to invest in the stock market again.

Looking on the bright side, bear markets favor the patient. Because of their turbulent nature, investors who are looking for funds in the here and now might find themselves anxious and uncertain when to make a move. But common sense dictates that investors should focus on keeping and increasing their purchasing power, and the only way to do that is to buy low.

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So, if you are lacking emergency funds for an unexpected liability or are planning a large purchase like a home or semesters of tuition in a few years, you should be avoiding new investments. You might be looking at a loss when its time to withdraw your assets or a postponement of your financial goals while you wait for the market to recover, The Motley Fool suggested.

Related: 6 Alternative Investments To Consider for Diversification in 2022

Of course, if you can afford it, investing in stocks when they are at their lowest price is wise. A healthy market does wonders for the stocks you already have tucked into your portfolio, but buying stocks at their highest price makes no sense at all unless you have sure-fire knowledge of future growth.

This is the perfect time to diversify your portfolio. This is also a good time to buy into government bonds, especially ones that are inflation-proof. Government and corporate bonds have never had a negative annual return over ten-year rolling periods, Forbes claimed. In general, you cannot lose money with investments you purchase for cheap now and hold on to for a few years.

According to The Financial Express, history dictates that bull markets normally follow bear markets, and bull markets last longer than bears — on average 991 days to 289. Being reckless will most likely result in a loss; keeping a cool head can make you a winner.

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A bear market — defined as a dip in stock indexes of 20% or more from recent highs — can last from 13 months at growth peak to 27 months at breakeven, according to CBS News. However, as The Financial Express noted, stocks lose an average of 36% during a bear market, but pick up 114% on average during a bull market.

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So, hold on and hold out to reap the most from your assets if you are a seasoned trader. If you’re a new buyer, invest for the long term, knowing what you will need and when you will need it.

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About the Author

David Nadelle is a freelance editor and writer based in Ottawa, Canada. After working in the energy industry for 18 years, he decided to change careers in 2016 and concentrate full-time on all aspects of writing. He recently completed a technical communication diploma and holds previous university degrees in journalism, sociology and criminology. David has covered a wide variety of financial and lifestyle topics for numerous publications and has experience copywriting for the retail industry.
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