Keys to Surviving Bear Markets


During these volatile times it is important to remind ourselves that markets have historically bounced back after corrections and bear markets. While market declines may seem drastic, the subsequent recoveries have also been dramatic when looking at returns one, five and ten years later.  With the S&P 500 down approximately 31% as of 03/24/20, this ranks in the top ten worst market downturns in U.S history.  While we have little confidence in predicting the market direction over the next few months, we have a much higher degree of confidence when taking a longer term look at how to handle a bear market. 

We may be driving down the road with only the rear view mirror to help guide us; however, past market events are a good indicator of what tends to happen after large market declines.

*Sources: Standard & Poor’s; American Century Investments, 2018.

The chart above outlines each past market downturn and the subsequent recovery over 1, 5, and 10 years.  While these times are uneasy for investors, a long-term view allows us to look past the noise and focus on the long-term returns we strive to obtain.  The historical average cumulative return after a bear market has shown to be 194% over the following 10 years.

We understand taking a long-term view can sometimes be easier said than done, so here are a few keys to help stay on track:

Keep Emotions in Check

  • Resist chasing the performance of high-flying investments. Today’s big winners can quickly become tomorrow’s big losers. A properly diversified portfolio will protect you from going all in on a few investments.
  • Hold on to investments that are core to your long-term plan, even if you are tempted to sell to cut losses.
  • Tune out the “noise” of political events or media hype. While they may temporarily impact markets, they can also lead to buying and selling at the wrong time.

Stay in the Mix

  • Keep a balanced portfolio of stocks, bonds and money market funds which may help reduce the overall risk in your portfolio.
  • Choose investments that don’t react the same way to market events to help smooth out performance. When one investment type isn’t doing well, another may be in favor.  Your goal should not be to maximize every dollar, but instead put up roadblocks to stop you from careening off the edge of a cliff.

Review Regularly

  • Analyze your portfolio at least once a year to make sure the allocation continues to meet your goals, your comfort with volatility and your investment timeframe.
  • Rebalance when you need to adjust for changes in the value of your stock, bond and money market investments to get back to your desired investment mix.

Don’t Go it Alone

  • Professional investment management is especially valuable to you during times of uncertain market directions.
  • A prudent, holistic planner that sees the entire picture can take advantage of these volatile times to help not only limit damage but place you in a better long-term financial situation.


For every one of our clients, they should know we have stress tested their portfolios before they became clients and regularly along the way, especially in markets like we are currently experiencing. We could not have predicted what is happening now or the cause, but we tested every single client’s financial plan in similar market return environments.  Having a properly stress tested financial plan in place when times are good and sticking to that plan allows us to make wise financial decisions on a client’s behalf when times are not so great.

If you have questions about how to handle a bear market, contact us, as we stand ready to serve.  If you know someone who does not have a formal financial plan in place or that has not stressed tested their portfolio, we welcome the opportunity to have a conversation with them.

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