The bear market is coming? Are you fearful at this moment?

“If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.”- Warren Buffett

“This bear market will be different! I know it, it is coming!” My friend, Mr. Tan who is a property developer repeatedly told us in our Whatapps investment group. He is a savvy investor and developer.

Yes, more and more financial gurus like Robert Kiyosaki share the same sentiment as Mr. Tan. For months, there has been endless turmoil in financial markets. They might be right, the market sell down we experience today seems different from all the previous ones.

This time is different

The fear in the markets at this moment is of a magnitude not seen for a generation. Global inflation is in double digits for the first time in nearly four decades. Global market has dropped more than 25% up to date, Ukraine war is dragging longer than many could have imagined, Federal Reserve has hiked interest rates at the fastest pace since the 1980an.

Worse still, the government bonds which are considered by many to be safe are on course for their worst year since 1949.

Yes, they might be right, this time is different!

Should you be worried?

There are many factors affecting the direction of the market and they are complicated. Many investors hope to know if the worst of the stock and bond market decline is over, unfortunately no one has the crystal ball to predict the future.

I can’t tell how’s the market going to move next week, and I believe Mr. Tan can’t do it either.

Should you be worried about the market direction next week or next month? I do not think you should be worried about how the market reacts in near team if you are a long term investor.

One thing for sure!

Nobody should be making very short-term decisions based on what’s going on today. History has repeatedly told us that eventually the market would inch higher in long term.

If you look at the previous 10 bear markets, in 3 months time, 8 out of 10 ( 80%) of the time, it rebounded with an average return of 3.8%.

You get a positive return 7 out of 10 times if you wait for 12 months with an average return of 14.8%!

Yes, eventually the market will go up higher and it has only one direction to go- up in long term!

You can’t wait for one week, one month or one year to invest! The best time to invest your money is today!

I am happy at this moment

If you plan to add money to the markets for the next several years, you should be happy when stocks fall.

Remember Warren Buffett’s rule of thumb: Anyone who will be adding money to the markets for at least the next five years should prefer to see stocks fall, not rise.

If I was happy to buy VWRD at USD 110 a few months ago, I should be happy to buy it now at USD 94, shouldn’t I? The same rule applies to our daily shopping too. It will be crazy if I turn down 10-10 sale in Lazada to buy my groceries even though the price for the same item is now at 25% discount.

Conclusion

If you invest in broad index fund/ETFs like VWRD, VUSD, SPY, and have a time horizon of at least 5-10 years, do not worry about bear market.

Actually a major correction of stock market can help you make a lot of money.

And don’t time the market because no body can do it. Add money whenever you have it and keep buying. Ignore the noise and fear, you will be ahead of many people after 5 years.

PS: Thank you for your support, get a copy of my book ” ETF investing for Malaysians” now in major bookstores, Shoppe or Lazada. Remember today is 10-10 Sale, you get everything at discount.