Investors can be really roughed up during bear markets. Should you stay invested in shares during bear markets?
Seeing your investments fall heavily can be very demoralising for people, particularly if you've never experienced something like this before. This won't help much, but don't forget that share markets have fallen heavily in the past – the GFC and 1987 to name two times for the ASX.
As people we're wired to stay away from danger as much as possible. Over the thousands of years it helped us avoid becoming a lion's lunch. But in terms of shares it can end up leaving you worse off if you try to avoid danger.
The share market has fallen again today. It's down almost 30% since the falls started. Your wealth (on paper) has already felt that decline. At this point the only thing you'd be protecting against would be potential further falls. The share market has regained lost ground every time in history whether it took a month or a few years. Eventually it hit a new record.
If you think you can predict when the share market will fall and by how much, then good luck with your plan. If you were to sell, what would you do with the money? Cash in the bank is hardly earning anything now.
But think about shares like TPG Telecom Ltd (ASX: TPM), APA Group (ASX: APA), Altium Limited (ASX: ALU), A2 Milk Company Ltd (ASX: A2M) and REA Group Limited (ASX: REA). I don't think their long-term prospects have been fundamentally changed by the coronavirus.
I view these share price falls as an opportunity to buy shares at cheaper prices. You wouldn't sell your house just because someone is offering a lower price for it this year.
My answer: Yes, stay invested
I think shares are the best option over the long run. The fall has already happened and at these prices, with the current interest rate, I think shares are the only assets that make sense to buy right now.
I wouldn't want to buy every type of share. It's too early for banks in my opinion. Travel shares are also a big unknown. But there are plenty of beaten-down opportunities to buy today for the long-term.
