{"id":1736,"date":"2019-12-02T12:36:00","date_gmt":"2019-12-02T12:36:00","guid":{"rendered":""},"modified":"2025-03-11T12:39:38","modified_gmt":"2025-03-11T07:09:38","slug":"how-to-build-a-portfolio-that-can-perform-in-bear-markets","status":"publish","type":"post","link":"https:\/\/www.equentis.com\/blog\/how-to-build-a-portfolio-that-can-perform-in-bear-markets\/","title":{"rendered":"How To Build A Portfolio That Can Perform In Bear Markets?"},"content":{"rendered":"
<\/div>\n

An Investor\u2019s Guide To Preparing For A Gloomy Market<\/strong><\/p>\n\n\n\n

Economies and markets are cyclical in nature. So bull and bear markets are inevitable. In today\u2019s story, we will be talking about creating a portfolio that can last even in a bear market<\/a>.<\/em><\/p>\n\n\n\n

In a bull market<\/a>, most of the investors make money. But how to prepare for a bear market? Most of the times, preparing for a bear market is all about making small tactical moves that help you to maximize the returns and minimize the risks. Let\u2019s look at a few of the right and wrong practices while preparing for a bear market.<\/p>\n\n\n\n

Wrong:<\/strong> Portfolio management is all about market timing.<\/p>\n\n\n\n

Right:<\/strong> Can you predict a bear market? Well nobody can. It may be waiting just around the corner or maybe after a few years. Smart portfolio management is all about managing risks, not timing market. Preparing for a bear market doesn\u2019t mean you need to jump from equities to cash, where most of the times you\u2019ll miss out on gains that normally comes towards the end of a bull market.<\/p>\n\n\n\n

Wrong:<\/strong> You don\u2019t need to rebalance your portfolio when there is a sign of down market.<\/p>\n\n\n\n

Right:<\/strong> To prepare for the tougher times, one needs to let go of the riskier stocks that have a high beta and increase exposure to stocks that have relatively low risk. The idea is to keep performing stocks and safer businesses and get rid of high risk and non-performing stocks.<\/p>\n\n\n\n

How To Build A Portfolio Than Can Sustain The Bear Market<\/h2>\n\n\n\n

And anything can trigger it. Global<\/a> trade war, oil crisis, political instability and terror events like 9\/11 etc. However, you can structure your portfolio in a way that is built to sustain the toughest storms.<\/p>\n\n\n\n

1. Construct a well-balanced portfolio<\/h3>\n\n\n\n

A portfolio with only defensive bets can create long term wealth at a lower risk. However, in a bull phase, such stocks may underperform in comparison with the overall market. A bull phase rally is always lead by cyclical and high beta stocks.<\/p>\n\n\n\n

So what is the ideal way? The ideal way would be to choose a mix of both aggressive and defensive stocks from multiple sectors based on their fundamentals, business growth potential and management pedigree.<\/p>\n\n\n\n

As quoted by Warren Buffet says, \u201cDon\u2019t put all your eggs in one basket.\u201d<\/p>\n\n\n\n

2. Understanding market and business cycles<\/h3>\n\n\n\n

No one knows when a bear market will knock our door. If you understand business and market cycles, you\u2019ll be able to devise a portfolio structure that helps in curbing losses during a bear market.<\/p>\n\n\n\n

3. No one size fits all<\/h3>\n\n\n\n

Perhaps the most important factor, there is no one-size-portfolio that fits all. That\u2019s why you need to invest as per your risk appetite<\/a>, investment horizon and financial goals. An investor who is willing to take more risks may invest in stocks with high beta. On the other hand, a risk-averse individual will hold more businesses that are non-cyclical (E.g. FMCG) or a dividend stock that pays regular dividends to the investors.<\/p>\n\n\n\n

4. Focus on quality<\/h3>\n\n\n\n

Don\u2019t forget that when you invest in good businesses, your portfolio will not just survive any kind of bear markets but also outperform with time.<\/p>\n\n\n\t\t

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Related investing topics<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n How to Invest in Share Market? <\/h3>\n \t\t \t

Considering the volatility, investing in stock markets is both an art and science.<\/p>\n <\/div>\n \n \n <\/div>\n <\/a>\n <\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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\n 5 Best Places To Live After Retirement In India <\/h3>\n \t\t \t

While some retired people set sail on voyages worldwide, others look forward to spending their time in relaxation and comfort.<\/p>\n <\/div>\n \n \n <\/div>\n <\/a>\n <\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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\n 90% People Lose Money in Stocks? <\/h3>\n \t\t \t

Isn't it shocking? But it is a fact. There are countless reasons why investors lose money in stock markets.<\/p>\n <\/div>\n \n \n <\/div>\n <\/a>\n <\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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\n Is Long Term Investing Always Safe? <\/h3>\n \t\t \t

Let\u2019s understand what long-term means before we explain why Long Term Investing may not always be safe.<\/p>\n <\/div>\n \n \n <\/div>\n <\/a>\n <\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t\n\n\n\n

Read more: \u00a0How Long-term investing helps create life-changing wealth \u2013 TOI<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

An Investor\u2019s Guide To Preparing For A Gloomy Market Economies and markets are cyclical in nature. So bull and bear […]<\/p>\n","protected":false},"author":5,"featured_media":1737,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[9],"tags":[],"class_list":["post-1736","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"_links":{"self":[{"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/posts\/1736","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/comments?post=1736"}],"version-history":[{"count":1,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/posts\/1736\/revisions"}],"predecessor-version":[{"id":53405,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/posts\/1736\/revisions\/53405"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/media\/1737"}],"wp:attachment":[{"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/media?parent=1736"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/categories?post=1736"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/tags?post=1736"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}