This week, I’m talking about 5 mistakes that smart investors don’t make in bear markets.

Mistake #5 is losing patience in a bear market. 

Bear markets are painful, and can often last a long time. And the longer they last, the more hopelessness investors feel and the more often I hear the sentiment: “this time is different”. What’s true about all bear markets is that yes,“this time is different”. Sure, the circumstances that led to each current crisis is different, but there’s also something that every bear market has in common - they all end. 

The problem is that too many investors lose patience and bail, often near or at the bottom. On average, bear markets have lasted 14 months in the period since World War II...The S&P 500 index has fallen an average of 33% during bear markets in that time. 

Of course, that’s just an average, so bear markets can be short-lived too. The bear market in late 1987 only lasted 4 months, while the last bear market during the global financial crisis lasted a painfully long 18 months. 

For the stock market to return to it’s previous high-water mark, the recovery to new all-time highs can sometimes take years. 

So it’s not surprising then that investors lose patience and faith in the stock market. And when you lose patience, it’s tempting to abandon your long-term strategy. 

Instead, discipline and commitment are needed for long-term success with investing. Ensuring you’re diversified and that you don’t get stuck with too much in the stock market close to or during retirement will help insulate you and smooth out those bear market drops, making it easier to stay committed in the long-run. 

That’s it for today. Thanks for listening. Tomorrow I’m going to recap the week and give you a little preview of next week’s topic. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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