Surviving the Bear
Sorry for slipping last week. Lots going on, I had a few things that needed my attention. How has everyone been handling the volatility? It sucks, doesn’t it? Deep down, we all knew this was going to happen. Bear markets suck, though. They always do. Especially if it’s your first. Every bear market is different, and there will always be people out there that will tell you that the sky is falling. Don’t be one of those people. There are a bunch of self-help articles out there that can guide through the turbulence, but here are a handful of tips that have helped me in the past.
Obviously, if the loses are REALLY affecting you, please don’t be ashamed to reach out for real help. There are people out there who specialize in this. This too shall pass.
1) Talk it Out
The bear market of 2022 isn’t taking any prisoners. Nobody seems to be safe from this one… Bitcoin, crypto, stocks, bonds, even real estate is taking a hit right now. And making matters worse, inflation is affecting us all. Reach out to a friend who’s also interested in investing and try having a chat about it over a summery cocktail. Humans have a tough time realizing that they’re not the only ones going through hard times, and we too often hide behind fake smiles when we’re going through those hard time. Chances are your friend is feeling some of the same things you are, even if they’re not posting about it on social media. I’ve noticed that when I give someone a pep-talk, it resonates with me more than when I give that same pep-talk to myself. “If you want to go fast, go alone, but if you want to go far, go together.”
2) Revaluate your Goals. Risk Tolerance is Personal
Are you in for the long term? Lots of people say they are, but really just want quick gains. Have your goals changed? If your long-term thesis is still intact, you should be able to ride out this volatility, but if you’re having a tough time with it, adjust your expectations. Be honest with yourself, and remember that there’s no shame in selling a bit of your assets if it’s keeping you up at night. It’s better to take an “L” now, learn from your mistakes, and move forward, than to completely destroy your spirit. If you’ve lost money (in fiat or in sats) that you couldn’t afford to lose, reevaluate your priorities. If you put too much at risk and you need to move on… but don’t give up. I’ve seen people give up completely on investing after the Great Financial Crisis because their goals and risk tolerance weren’t properly aligned, and when they got steamrolled, they completely gave up. Don’t let that happen to you.
Bear markets do offer opportunities if you can handle it, but don’t be too hard on yourself if you can’t. I never thought I’d see Bitcoin under $20K or shares of Netflix under $200, so I get it if you’re feeling scared if you bought near the recent tops. If you can stomach it, use the opportunity to pick up some of the investments that were a on your wish list and fit into your plans, even if it’s just a few sats or a partial share. I generally avoid rebalancing during bear markets, but sometimes it can be cleansing to sell some of your losers to buy something that’s even more battered so you can start fresh. Remember though, I’m not giving financial advice.
3) Learn from the Greats
Seek out the wisdom of investing legends. While I don’t necessarily agree with their 2022 investment strategies, guys like Charlie Munger and Warren Buffett have gone through decades and decades worth of market cycles, and there’s a lot of value in that experience. Try Googling “bear market quotes” from these guys. There are plenty of important lessons to be learnt when markets are falling and most of them can’t be learnt through a textbook, and I find it helpful to see how the veterans of investing put those lessons into words.
What are your favorite quotes for getting through a bear market? This one is mine:
“Price is what you pay. Value is what you get.”
4) Keep Track of your Mistakes (Even if They’re not Mistakes)
I kept a trading journal for the majority of my investing career, and I always found it useful to go back and read. Over the past few weeks, I’ve been going through my journal to see what I was thinking when I made certain decisions. There were a few mistakes in there, but most of my buys made sense at when I made them. I jumped into a few tech stocks at the wrong time over the years, but the majority of my mistakes (aside from buying shitcoins) were on the sell side. Most of my mistakes consisted of me selling too early. Be honest with yourself (and that’s easier said than done). Everyone thinks they’re a genius in a bull market, and mistakes usually get brushed over with green paint. Obviously, bear markets are much less forgiving.
5) Get Outside
It’s summer. Get outside and enjoy it. Turn off all your financial notifications on your phone. If you’re used to checking your trading account every day, why not cut back to twice a week? If you absolutely have to, designate a friend to text you if shit REALLY hits the fan. HINT: It probably won’t… and even if it did, what would you actually do about it?
And one last thing that I have to repeat. If you’re really feeling down, don’t be ashamed to ask for help. There are resources out there. By no means am I a mental health professional, but if you ever need a simple message of encouragement, my DMs on Twitter are open (@therulersbroken). WGMI