No. 4: Evaluate Your Risk Tolerance

Your first bear market or two is a great time to get to know yourself as an investor. Are you lying awake at night worrying about your money? Or are you wishing you could pile even more money into the market and buy shares “on sale?” If the former, you might want to decrease your long-term stock to bond ratio (after the market recovery, of course). If the latter, you might want to increase that ratio — again after you’ve seen the bear market through.

No. 5: Consider Putting Off Major Purchases

Bear markets are a great time to invest more money, since you can purchase more shares with any given amount of money due to the lower prices. Conversely, bear markets are a rough time to sell shares in order to get more money to spend. This might be a good time to defer a major purchase. This may allow you to pick up shares at a discount, or at least avoid selling them low.

You can learn a lot about yourself in a bear market, but it’s most critical to avoid big mistakes, like panic selling.

DR. DAHLE blogs at https://www.whitecoatinvestor.com and is a best-selling author and podcaster. He is not a licensed financial adviser, accountant, or attorney and recommends you consult with your own advisers prior to acting on any information you read here.