3/26/06
Help, I’m a Bear! (maybe)
Many people recognize two types of markets; a Bull and a Bear. You hear these terms all the time and they both
have adherents in almost any given economic situation.
Bears are folks who feel the situation ahead is looking gloomy and an economic downturn is inevitable short
term and it will last a while. As Chekov said, “the long cold winter of our discontent.” Which doesn’t sound good,
but keep in mind it is only an opinion.
Bulls, on the other hand, have an upbeat positive look on the future. Also just an opinion.
Amazingly enough these creatures live among us. And among each other. These terms are also seen pertaining to
sectors of the market as well. You can be bullish on Energy, or Textiles, or Manufacturing. People were very bullish
on the Dot Coms a few years ago, until the bottom fell out. Now that sector is starting to gain momentum again,
but this time there is more caution, and companies need to show growth and at least some value.
Now to the meat of the letter. What can you do when there is a bear market to retain value in your portfolio?
I suggest looking for companies that are not quite so dependent on the overall economy and ones that have solid
value. No matter the economy people need to eat, so grocery stocks are going to keep value, as are heating oil,
gasoline, or staples of life. On the opposite hand, luxury items such as jewelry or high end autos are going to suffer.
People still need to drive, but in tough times, new cars are put off to future dates.
In my investing, I hold value stocks during the Bull or the Bear. Looking at underlying value and growth, you can
hardly go wrong. Investments in diamond mines might rise and fall, but for long term growth, you can stick with
steel. There may be more glamour in luxury and more growth (in spurts or even long term occasionally) but staples
are with you for life.
Don’t take that the wrong way. I do have diamonds in my stock mix, (so to speak) but I know to keep a close eye
on those stocks. Other investments can sit for years without a thought to sell. Long term stable growth will take
you through life and treat you right. Taking a chance can pay huge dividends, but remember to only risk what you
can afford to lose. With careful due diligence long shots are exciting and can pay off in spades.
As a closing note, life is what you make it. I have a realistic view of the future. I know we will go through multiple
bulls and bears throughout my lifetime, but I prefer to see the light at the end of the tunnel and beyond.
As always, I welcome questions and comments and will answer them individually.
Thanks
Rob
The columns, articles, message board posts and/or any other features provided on Wealth Training Source are provided for personal finance and investment information and are not to be construed as investment advice. Under no circumstances does the information in this content represent a recommendation to buy, sell or hold any security. The views and opinions expressed in an article or column are the author’s own and there is no implied endorsement by Robert Britt of any advice or trading strategy
copyright Robert E. Britt 2006
