The majority of markets, and certainly the majority of currencies and commodities, are now in a bear market. That’s an artificial word for anything that has lost 20% of its value since its peak. Many equities have dropped by 40% or more. Therefore we may need a new phrase to characterize them: zombie market? That is, is it possible to be dead and yet move?

Many investors fear a bear market since it nearly always means losing money. However, we wouldn’t advise running away from a bear since it creates opportunities. In light of this, here are five things to avoid doing in a bear market.

These are the Five things that traders shouldn’t do in a Bear Market.

Don’t alter your tactics

If you’re on a losing soccer team, you don’t suddenly switch your star striker to a goal at halftime. Changing tactics isn’t going to help you win, so stick to your strategy.

Don’t start buying growth stocks if you’re a value investor. Instead, make the most of your abilities. It’s bad enough that you’re trying to learn a new financial approach simultaneously.

Don’t expect it to go Down Occasionally

You might submit yourself to ongoing losses after witnessing day after day of persistent selling. Traders usually make this mistake. When everyone expects losses, that’s when markets normally turn around.

Keep your eyes peeled for possibilities. Of course, there is always something that could make you money at some point, but you must be on the lookout for it. For example, on a takeover bid, shareholders who kept with Progressive Waste Solutions Ltd. are up 18% this year.

Selling possibilities exist wherever there is panic, but you can’t take advantage of them if you’re hiding under your desk.

Don’t Spend a lot of Money on Hedge Products

From market-linked GICs to triple-down leveraged short ETFs, exchange-traded fund providers and brokers may offer various options to hedge your portfolio in a down market.

Even in a downturn, these things are always pricey and frequently fail to perform as planned. But, the horses have already left, and the barn door is already open.

Whether or not these are acceptable products, the time to purchase market insurance is before the bear market begins, not after.

Don’t get Panic and Sell Products

Many so-called experts will start predicting doom and gloom scenarios during a bad market. Others have spoken of “financial Armageddon,” such as RBS’s announcement to “sell everything.”

It can be frightening to listen to these people, yet bear markets have occurred in the past and will continue to occur in the future. Contrary to widespread assumption, the world is not coming to an end just because oil has broken through the $30 mark and the Nasdaq has dropped 12%.

I have seen it all before, like many other experienced investors. Don’t sell because you’re panicked. Although there may be further losses, panicking is never a good investment strategy.

Don’t put your money on a reversal

When oil touched $40, many investors bought energy equities, believing there was no way oil could go below $30. But, of course, we’re now well below US$30, with many forecasting US$10 as the next target.

Investors at Baytex Energy Corp. thought the stock would turn around $10 per share, but it fell below $2 this week.

I have no idea where oil will hit bottom, and neither do you. It doesn’t follow that just because something has dropped 50%. It can’t drop another 75%. There is no way to bet on a recovery. Stick to a plan and diversify your investments.

Conclusion

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