Things Investors Should Know About Bear Markets

by khalid on 05/09/2011 · 0 comments

The first lesson any investor should learn is that bear markets can last for a few months. Many-a-times it is seen that investors invest in stock market hoping to get more profit when in real the bounce back in the stock market at some point in bear markets is nothing but an early stage of the coming crash. Market investors buy shares without evaluating or undermining the impeding crisis and the impacts it may have.

NSE has seen bear markets many a times in the past two decades because of scams. These cases happen when the valuation doesn’t go with the situation of the economy. Although stock markets correct these evaluations but the progress is mostly slow. Generally, it can prolong for months while the impacts of the crisis slowly get out in the open.

Harshad Mehta in 1992 fooled the investors and BSE index witnessed a bear market which destroyed investors. In 2000, despite the efforts of Prime Minister Atal Bihari Vajpayee, the IT industry crashed and bear market ended after 2 years. And in the most recent case in 2008, the bear market continued for 14 months.

Experts advice the investors not to invest in the stock market whenever they are in doubt. It is foolish to underestimate an economic crisis and even if you’d like to invest, go for conservative stocks. Jumping to invest when the economy is witnessing a bear market is not in the best interest of the investor and hence should be most definitely avoided.

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