Given the recent market conditions, I’ve been increasingly asked “how do you navigate a bear market?” It’s important to remember that the rules change in a bear market. Even though we aren’t there yet, it is always good to educate and prepare well in advance. Here’s what I do:
Understand that cash is a position
The rules are reversed in bear markets
What if you can’t short?
If you want to short but don’t have the ability to short because you do not have a margin account, find inverse ETFs to express your idea. Two very popular inverse ETFs are SDS (2x short SPY) and SQQQ (short QQQ).
Two very good sites to research ETFs are:
Here are some other posts you may enjoy:
- Great Lessons from Wall Street Legends
- Gambling vs Trading… The difference is in the long game
- Top 10 Timeless Trading Tidbits