While walking my dogs in Symmes Park on Halloween morning I encountered a black bear. I knew the bear had been spotted in the area because signs have been posted for about two months. When the signs first went up, I did my due diligence by going to the websites for the township and Ohio Department of Natural Resources. I found out how you should react if you encounter a bear – make noise, don’t approach or feed the bear (really?) and don’t run away. I had my plan in place. In the unlikely event that I saw him for myself, I would slowly back away and change my route. Unfortunately, when staring my fuzzy black fear in the face, all of my planning went out the window and I did exactly the opposite of what you should do – I ran away as fast as I could!
As I have played this scene over in my head, I began searching for something that would have made my response different. Maybe if I wasn’t alone, and had my husband, or another person with me, I would have been able to respond more rationally. Even though I had done my research, maybe I should have created a different plan. I’ll never know…hopefully.
What does this have to do with investing? A lot, actually. My incident with the bear and my response is very similar to what investors face each day. Although you can put a plan in place by creating a portfolio based on your past tolerance for risk and discussing the best course of action when facing a bear market (now I understand where the name comes from!), your actual reaction may be far different than your plan.
With bear markets occurring about once every five years, what can you do to make sure you don’t run from the bear and endanger your goals? The first step is to ignore the media. They will typically make you feel as if you need to make a split second decision whether to flee or not- and you don’t. When staring the next bear market in the face and your inclination is to run, turn off the TV or computer, take a few deep breaths and call your advisor.