Yesterday, the Wall Street tumble again and Dow confirmed that a bear market is happening as the financial crisis after the World Health Organization called the coronavirus outbreak a pandemic.
But what is a bear market anyway?
A bear market is when the stock market moves down by at least 20% from recent highs. Interestingly, a bear market is named for the way that the bear attacks its victims. A bear swipes downward during an attack, thus becoming a metaphor for market activity under these conditions.
If the bear market is when the market decline, what is the opposite?
The opposite of a bear market is called a bull market. A bull market is defined by the market going up aggressively over a period of time. As the market starts to rise, there becomes more and more greed in the stock market. More and more people will "invest" into the market, pushing it higher and higher.
So what should I do if there is a bear or bull market?
The most simple answer is to do nothing but to stick to your financial plan. If you are investing in a ringgit cost averaging, continue with it. But if you have been preparing for this bear market, buy the company or companies that you know are good at a discounted price, if any. Technically, a bear market is like the "Sales season" in Malaysia where many, if not all products are being sold at a discount. If you have been doing market research and know a certain company has a solid foundation, you can buy into the company if you think the price is right. In the long run, the market will reach a bottom and start moving up again.
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