Savvy Investing in Bear Markets
Since last week, the U.S. stock market has officially entered a bear market. In today’s episode, Grant shares his thoughts on making smart decisions for investing in bear markets. Grant reviews how long bear markets typically last, and what we might expect in the next few weeks. Grant also discusses five savvy investment strategies you can use when markets sell off.
[02:49] Circuit breakers – Stock markets have safety measures that shut off markets if the stock markets fall rapidly. Grant explains how these measures work and how they kicked in last week.
[04:33] Bear markets – Grant covers what a bear market is and how we have arrived in bear market territory in the least amount of time in record.
[07:47] What historical data tells us – Grant reviews a chart created by J.P. Morgan Asset Management that shows annual returns vs. intra-year sell-offs since 1980.
[10:31] Long market crashes in history – Grant talks about long it has taken to recover from previous bear markets. He also covers how the current situation is different from historical bear markets.
[14:36] Possibility of a recession – Grant shares his thoughts on whether this situation will escalate into a recession.
[15:00] Tips – Grant Introduces some tips for investing in a bear market.
[16:17] Harvesting capital losses – Benefits you can get from investing your capital losses in your taxable investment account.
[23:20] Harvesting capital gains – How you can qualify for long term capital gain tax treatment by wisely harvesting your capital gains.
[26:27] Rebalance your portfolio – Grant explains how the value of bonds typically rises when stock values fall and how you can take advantage of it.
[29:33] Fund your accounts for the year – A bear market situation is an excellent time to contribute to a 529 account, an education account, an IRA, or a similar fund. Grant explains the reason for this and the benefits you can get from funding your accounts for the year while stock markets have fallen.
[30:53] Roth IRA conversion – Grant explains why a Roth IRA conversion can be a wise move when your stock funds are down.