Holding Stocks in a Bear Market
May 19
/
Cayden Chang
So, what should you do if you're already holding some stocks and the market is dropping?
There are a few key questions you must ask yourself. If you’re unsure about any of them, don’t worry — you can always post in our *closed group for discussion. That’s what the community is for.
*To find out more about the Value Investing Programme and our support system, join our free Value Investing Masterclass
First Question:
The share price of your stock has dropped — but has the intrinsic value dropped too? More specifically, has the company lost its economic moat? Yes or no? It’s a straightforward question, but if you didn’t do proper homework before buying, then… good luck figuring it out!
Second Question:
Assuming you did your homework before buying the company, ask yourself: Are the ViA (Value Investing Analysis) numbers affected?
If yes, is it a temporary issue or a permanent one?
For example, with companies like McDonald's or Starbucks, they may face some temporary disruptions — like supply chain issues, inflation, or short-term closures — but they usually recover. So if it’s temporary, what can you do?
Here are your options:
- Do nothing - This is for the ultra-stingy!
- Buy more - But only if the stock still fits within your 10% allocation rule.
But if the change is permanent, then you need to reconsider holding the stock. This is when you might have to make the tough decision to cut your losses — what we call the “low loss rate” scenario.
This whole situation is most relevant to those of you already holding stocks.
Now, for those of you who don’t hold any stocks yet, or only hold a few:
Here are three things you can consider doing:
- Do nothing - just observe and wait.
- Invest in something else - and this includes those who are already partially invested
The first alternative you can consider is the S&P 500 ETF.
You remember this, right? When the S&P 500 drops 20% from its previous high, it’s a strong indicator we’re in a bear market. The S&P 500 ETF is simply an index fund — a broad representation of the market.
In the next article, I’ll share with you option two and option three.
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Want to learn how to spot value stocks? Join my upcoming webinar by scrolling down!
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Disclaimer: The information provided by ViA Atlas by Value Investing Academy, Mind Kinesis Investments Pte Ltd is meant for educational purposes, and is in no instance to be regarded as investment advice. You are advised to practice due diligence before making any financial decisions. All forms of investments carry risks and such activities may not be suitable for everyone. We are not liable for any losses incurred from your investment activities. Past investment performance is not necessarily indicative of future performance, even if the same strategies are adopted.
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