Rights & Money

Investing When the Market Is Down

With the stock market down, so is the cost of investing.

By Katrina Caruso


The stock market, which had been rising and rising for quite a while, took quite a blow last week—twice. We may be entering what investors call a bear market, meaning that the market takes a nosedive (dropping 20% or more) over a minimum of two months after a big high. This drop in the market is is often caused by an increase in consumer pessimism and stock sell-offs. Bear markets are inevitable (however, the time and length of a bear market aren’t easy to predict), as the market can be volatile and the high rates can’t always stay high.

While this may sound like bad news for those who already have money invested, this may be the ideal time to invest for those looking to add to their portfolios.

Here are a few tips:

– Gains can be made through the process of short selling, which is to say that investors sell their shares and rebuy them at lower amounts. This must be done through a stock broker.

– Practice caution and do the research on each stock that you’re considering buying; knowing enough about the investment can help you choosing when and how much to buy. This way, investors can put their money towards a company that has room for growth and high quality stocks.

– Research will allow you to be and feel prepared for new investing opportunities.

– Stay focused on the prize of a return on your investment rather than getting too caught up in the excitement.

– Make smaller and more diverse investments, rather than putting all your money into one company.

Photo: iStock/Vertigo3d.