Fortunes will be made in this current bear market as in-the-know investors use the 20 percent drop as a major buying opportunity, says Nigel Green, CEO and founder of deVere Group, an independent financial advisory, asset management and fintech organization.
Green’s observation comes as the S&P 500, Wall Street’s main stock index, shed 3.9 percent on Monday. The index fell another 0.5 percent on Tuesday and is now 22 percent below its record set early this year and now officially in a bear market.
Other major stock markets around the world have also been experiencing sell-offs in recent days and weeks too.
Bitcoin, the world’s largest cryptocurrency, has also lost nearly 30 percent of its value in just seven days, weighing on the broader digital currencies market.
A bear market is the term used to describe the plummeting of financial markets by 20 percent or more from their most recent all-time high.
“Fears about possible recessions have tanked stock markets around the world amid reports that the U.S. Federal Reserve – the world’s most influential central bank – could raise interest rates by as much as 0.75 percent on Wednesday, which would be its biggest single hike for nearly 30 years,” Green said.
“There’s huge uncertainty right now – which markets loathe – and this, of course, is creating mass anxiety amongst investors.
“And away from markets, people are rightly worried about how this will all translate as companies seek to cut costs, jobs and investment as they experience a painful cost of living crisis not seen for decades.
“This can be highly stressful, and a financial adviser can help people navigate choppy waters.”
He recommended investors to stay invested in the market and not to sell unless they urgently need the money, and to ensure their portfolios are properly diversified, which he said was the “best way” to mitigate risks and reap rewards.
“Your future self will thank you. The average bear market lasts less than a year and they typically rebound stronger than before.”
Nigel Green, a serial investor and entrepreneur, says that long-term investors will be using the downturn as an opportunity.
“History and recent data teach us that bear markets are usually major opportunities to build wealth for investors who top-up their portfolios with quality stocks at lower prices,” he said.
The last bear market was in 2020, but it was unusually short as it only lasted about a month. The current one is likely to be longer due to the slew of contributing factors that are fuelling it.
“Despite the panic, bear markets have historically been optimal times to build wealth for savvy investors. But this is not the time to dabble in DIY investing or financial planning. Advice is your best friend right now,” Green said.