37 Tips, Facts, and Rules For Trading Stocks in a Bear Market
Posted by Blain Reinkensmeyer on Friday August 17, 2007
This list is inspired by the recent stock market tumble which has seen the S & P 500 fall more than 8% in less than a month.
- Sell everything by moving to 100% Cash.
- If buying on breakouts, take any profits quickly.
- The biggest black bear ever found was 880 pounds.
- Don’t trust ratings systems, in a bear market almost everything is free game for failure.
- Sell all of your mutual funds.
- Don’t buy any more mutual funds.
- Don’t invest your life savings in the market than pull out Trading For Dummies and start reading from chapter 1.
- For any new positions on the buy side, use tight stops of 2 - 4% max versus a 7 or 8% standard during a regular market.
- Bears have smelling capabilities far greater than humans. Some bears have a nasal mucosa area about 100 larger than in humans.
- Don’t buy into analyst recommendations.
- For bigger single day moves of 5% or greater, take profits the day of or the day after and walk away.
- No one is your friend. You are your own friend, trust only yourself.
- Take positions in larger defensive stocks with a high yield.
- Buy ETFs that are short the overall market, QID for example.
- Don’t play the, “I have a feeling the market is done selling” game and try to catch the bottom.
- Remove any margined positions.
- Don’t buy any more positions on margin.
- Don’t take Nyquil after being on Vikatan, a buddy of mine did it in college, it is only funny for the first 30 minutes.
- A good lean bear can run at speeds in excees of 30 mph.
- Three heavy distribution days in a row for the market means go away.
- Three heavy accumulation days in a row for the market during a bear market means enter with extreme caution, not jump right in.
- When everyone realizes the market is crap and the day comes that even CNBC is saying the market is in a bear, that is the time to start looking for buying opportunities.
- An option in Wall Street terms is not the same as in football.
- It is a fact that three out of four stocks follow the overall market trend.
- Hedge your risk by buying options.
- If your broker can’t send over a list of all of your current positions and tell you your exact account status he shouldn’t be your broker.
- Some bears will hibernate for over 7 months of the year.
- If you are new trader, understand this is not the time to be getting your feet wet to “see what happens”. Being on the sidelines for a few more months won’t kill you.
- A profit is a profit regardless of how small.
- After ten consecutive heavy sell off days in a row, go down to Wall Street on the first up day and yell with arms flailing, “The bull is back, the bull is back!!” I guarantee you will drive buying and help a few hundred more people lose even more money over the next few weeks.
- It is a fact that during the 2000 - 2002 crash the whole way down analysts were making more 10x more buy recommendations than sell recommendations on stocks.
- The bigger your ego before the bear market, the greater the fall during the bear market.
- Bears are good swimmers, one recorded swim was for more than 9 miles in the Gulf of Mexico.
- During the 2000-2002 crash multi millionaires were made by selling stocks short on weakness.
- In case you were confused about 24, this means that every day the market ends red, 3 out of 4 stocks close in the red as well.
- Typically the biggest market leaders during a bull market are some of the biggest sellers during a bear market.
- If you ever are attacked by a bear, your best chance for survival is to play dead.
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- 16 Tips to Trade Stocks with Success
- 6 William O’Neil Rules For Short Selling
- Investor Education: IBD 20 Trading Rules
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