How long do bear markets typically last?

Historically, bear markets have lasted an average of 13 months. However, their duration can vary significantly, from just over a month (like the COVID-19 bear market in 2020) to several years during major economic crises.

What is the difference between a bear market and a correction?

A bear market is defined by a decline of 20% or more in a broad market index from its recent peak, often accompanied by widespread pessimism. A correction is a shorter-term decline of 10% to 19% that typically recovers more quickly without a sustained shift in investor sentiment.

Should I sell all my investments during a bear market?

No, selling all your investments during a bear market is generally not recommended. This locks in losses and prevents you from participating in the inevitable market recovery. Instead, focus on staying invested, dollar-cost averaging, and rebalancing your portfolio.

What are the best investments during a bear market?

During a bear market, defensive sectors like consumer staples, utilities, and healthcare often perform relatively better. Bonds, especially government bonds, can also provide stability. Cash is crucial for liquidity and to take advantage of buying opportunities. Gold is sometimes considered a safe-haven asset.

How can I protect my retirement savings from a bear market?

Protect your retirement savings by ensuring proper asset allocation based on your age and risk tolerance, maintaining a diversified portfolio, and having a sufficient emergency fund. Continuing to invest through dollar-cost averaging in your 401(k) or IRA can also be highly effective for long-term growth.

Is a bear market a good time to buy stocks?

Yes, for long-term investors, a bear market can present excellent buying opportunities. High-quality companies often become available at significantly reduced prices, allowing investors to accumulate shares at a lower average cost and benefit greatly when the market eventually recovers.

What is tax-loss harvesting?

Tax-loss harvesting is a strategy where you sell investments at a loss in a taxable account to offset capital gains and potentially up to $3,000 of ordinary income annually, thereby reducing your tax liability. The proceeds can then be reinvested into a similar asset after 30 days to avoid the wash-sale rule.

Bear Market Investing Guide: Strategies & Protection | One…