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Wednesday, February 18, 2015

7 compelling reasons why bear market is best for investing

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(18/2/2015 Bearish Markets basics): Hearing the word 'Bear market' is enough for bring cold chills to an stock market investors. Almost all of the investors relates bear markets to losses, which is not always correct
. In This article I would discus 7 reasons why bear markets are probably the best time for investing your money.

An investor can identify the bear market if there is fall of around 20% or above in previous one month of trading. If there is 20% fall then one should know these 7 compelling reasons about bear market investing.

7 compelling reasons why one should invest in bear markets:

1. Fundamentally strong stocks are available at good value for money price during the bearish times. Fundamentally strong stocks are the best stocks to invest your hard earned money.

2. Value stock market investing is much easier to do in bear market rather then bull market as during bull markets stocks are often overpriced wrto value they offer to investor

3. Shortlist a good stock which declined in bearish market due to investor sentiments and panic selling. Such good stocks are available at very budgeted prices during the bear market and would surely give you huge profits after the bearish trend ends.

4. Purchase a stock which fell only because of external factors and which declined because of ripple effect of a falling sector on another sector stock. Such ripple effects of one sector on other sector stocks is temporary and is sure to end in short time, thus this makes profit inevitable.

5. Bearish sentiments is mainly due to advice of people and hence this is best time for self analysis of a company and choosing a strongly managed company during bear time.

6. World's greatest investor Warren Buffett (read Warren Buffett way of investing) is best known for investing in bear markets and earning huge profits in a life time. There are numerous other stock market investors who have earned billions just by investing during bear markets. here is list of all time greats of stock market investing. This substantiates that Best stock investing time is during bear market

7. It is often seen that during bearish times an investor makes 15-20 percent or above per annum by investing in fundamentally strong stock, whereas during the bull markets it is 5-10% or lower in the same time frame. hence ROI in bear markets is much higher then ROI in bull markets.

Therefore the best time for investing in stock markets and making huge profits is during the bearish times.

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