No one knows exactly where the next bull market arrives, but it is quite possible that another one will happen in the future. So, I wonder, how best can we prepare now for the next bull run after a choppy downward year and now a sideways choppy market movement?
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What is a Bull Market?
A bull market is a period of sustained upward price movement in the stock market, and it can be an excellent opportunity to make significant gains for investors. Here are 3 ways I am preparing for the next bull market:
1. Build a Diversified Portfolio (with some cash)
I still believe strongly in strategic diversification, especially with broad based index funds and ETF’s. One thing I like about these investment vehicles is that they “self cleanse”, meaning the weaker companies fall out over time and the stronger ones tend to stay and power the funds higher over the long run.
It is important to have a diversified portfolio that spreads your investments across different asset classes, sectors, and industries. This can help you reduce your risk and maximize your returns in a bull market. You can do this by investing in stocks, bonds, real estate, and other asset classes.
And finally as they say, keep some “dry powder” or cash around. This allows you to jump on market opportunities when they arrive.
2. Invest Regularly (Dollar Cost Average)
One of the best ways to prepare for a bull market is to invest regularly. By investing a fixed amount of money each month, you can take advantage of market dips and build your portfolio over time. When the market has tanked, I kept adding my fixed percentage each month. When I look back on these times my only regret is I wish I had put more in.
Perhaps when the market is choppy and down, is a time to up the percentage contributions we are making so we are buying more shares on the cheap?
3. Develop a Strong Psychological Mindset
Investing is as much a psychological game is it is a numbers game. As investors we must develop a strong mind for investing. Markets are erratic and can be all over the place, sometimes with little warning or even good long term reasoning. Here are several ways to be psychologically Money Viking strong to increase your investment success during bull and bear markets:
- Stay disciplined and patient: One of the key psychological tips for successful investing is to stay disciplined and patient. This means that you should have a long-term investment strategy and stick to it, even during periods of market volatility or uncertainty. It’s important to resist the temptation to make impulsive decisions based on short-term market fluctuations, and instead, focus on your long-term goals.
- Manage your emotions: Emotions can play a significant role in investment decision-making, and it’s important to manage them to avoid making irrational or impulsive decisions. For example, fear can lead to panic selling during market downturns, while greed can lead to chasing high-risk investments with the hope of quick returns. It’s important to remain calm, rational, and objective when making investment decisions.
- Do your research: Doing your research is another important psychological tip for successful investing. This means taking the time to thoroughly research potential investments and their underlying fundamentals, including financial statements, market trends, and competitive landscape. By doing your due diligence and gathering as much information as possible, you can make more informed investment decisions and reduce the impact of emotional biases on your choices.
For more ways to succeed at investing check out the Money Vikings investing trifecta:
Be sure to check out Jerry’s options trading strategies for more ideas to thrive in all market environments. What other ways are you preparing now for the next bull run?