Two problems you need to solve for a bear market (Maybe 3)

Eric Seto

Apr 20 • Long term investing ideas

As a long term investor, there are two (perhaps 3) problems you need to solve for a bear market.

1. When is a bear market?

Most people, including myself, spend a lot of energy determining when a bear market is happening

For example, 6 months ago, my friends - investment bankers, real estate investors, real estate specialists.

People with Accounting and Finance degrees thought Trump was going to PUMP the market.

Even seasoned investors with 10+ years of experience (multi-million net worth), thought Trump would pump the market

Even BILL ACKMAN (the billionaire), thought Trump would pump the market as well (he apologized later on Bloomberg news).

So if you didn't predict the recession this time, it was a difficult one.

I almost forgot now but my wife and my parents remembered that I said, "If Trump won, the market will go down."

So in a sense - I predicted that Trump would crash the market, which brings me to the second question...

2. Are you able to avoid it?

Turns out, this is much harder than predicting the downfall.

As I am a generally bullish investor, I didn't want to short the market that frequently.

I want to be net long (which I still do).

So, I was observing the beginning of 2025 to see if the market will correct itself and go back up.

However, one tariff after another, the market went down significantly.

So even if I had predicted the recession, I needed more discipline and a better system to avoid it.

This is why I revised my forecast and system this year to do both long and short.

For general bullish year, it doesn't make sense to short as the opportunities to short are rare.

But during a recessionary year, you want to either hold cash, short occasionally, and try to buy near the bottom.

That's what I started doing in late March till April, which has been a profitable month in April for me.

But shorting is no easy task.

While we didn't get to avoid the downturn near early 2025, now we can do both long and short as we are more flexible once we know what kind of year this is (recessionary year).

Thus, you need 2 things during a bear market

1. The ability to tell when it is coming

2. The courage to hold cash and avoid it

(3. Perhaps you can enter some shorts or hedge as well)

The only person I know who successfully avoided the bear market this time was Warren Buffett.

Cheers,

Eric

----

Eric Seto

Chartered Professional Accountant (CPA)

Chartered Investment Manager (CIM)

Founder of 5MinInvesting.com

In May, my goal is to help 20 people without a financial background to master investing through Investing Accelerator.

Investing Accelerator is designed for people without a financial background.

The goal is to achieve 30% return per year.

In the first phase, you will learn long term investing and targeting 30% for tax free compound growth. This will help accelerate your overall wealth.

In the second phase, you will learn monthly passive income to provide a more predictable cash flow (target 30% per year) which can cover your expenses. This will help accelerate your retirement goals.

If you are interested, then let's hop on a call to see if you can benefit from the strategies in Investing Accelerator and get 30% per year.

During the call, we will map out exactly how you can achieve 30%, what you are lacking, how you can improve.

If you have any questions about the program, you can ask during the call as well.

Schedule a call here: https://bit.ly/48mJlgR

Remember to go to the Classroom tab for additional investing resources.

(If you want to be a shareholder of Investing Accelerator and get 20.5% dividend (monthly distribution), $200K investment would be $40K in dividends per year. you watch the investor presentation here: https://bit.ly/3CKVp0R)

19 comments