investophobia

Hello guys, hope all of you are fine. Today, we are going to talk about some bearish moments of stock market. Bearish moments is the moment where people don’t want to put their money into the market especially retail investors like me and you. When i have started my investment journey( 2-3 years ago), I did not have any knowledge about these things but when i got some some knowledge about these things, I was reluctant to put my money into the market and that was the biggest mistake of my investment journey. In bearish market, people afraid to invest money in the stock market because at that time, the index goes down along with many stocks which are not the part of that index also.

Different people have different opinions about bearish market. As per my opinion, if the price of an index goes down upto 20% from the current price, then that’s a kind of bearish moment for me and same goes to the stock also. Bearish market gives u opportunity to invest more and more in stock market. During the bearish market, if u are afraid of putting ur money in the stocks or any any kind of active mutual funds, u can put ur money in the index funds. If u don’t know about the index funds, u can check out my previous post where I have explained about it

Some important bearish moments in stock market are:

1. Dot com bubble

I think this dot com bubble incident occurred between 2002-2003(I don’t remember the exact year). In this event, there were lot of technology stocks collapsed due to weak financials. Before the dot cum bubble incident, there were alot of technology related startups where the venture capitalists firms put their money in these startups because of the trend at that time. Everyone put your their money in the technology companies and people didn’t care whether those companies were in the profit or in loss. Even there were alot of tech ipo that were launched at ( Before the dot com bubble). But when the dot com bubble event occurs alot of technology startup companies got collapsed, Some tech companies got merged with other big tech companies. But there are very few tech companies who could able to survive from this event like Amazon, ebay, Cisco etc. because of their profitability and strong management skills. Dot com bubble arise due to excessive investment in technology companies even some of those companies were in loss. That’s the reason u should never follow the market trend and people blindly while putting ur money in a particular sector.

2 2008 financial crisis

This crisis is the biggest crisis after 1929 great depression. It is said that if USA gets cold, then it effects the whole world. It means that if some important events happened in us, it will effect all over the world ( incident may be good or bad). That’s the power of USA in the financial market. 2008 financial crisis is also a part of it. The main reason of this financial crisis is housing prices. Actually in 2008, people thought that the housing price will be increased in future. As a result, alot of people made investment in real estate. But unfortunately they were wrong because that increase in housing price was fake and u know then what will happen. Suddenly the housing price decreases. As a result, people who made investment in real estate made significant losses.

Another reason of 2008 financial crisis is the demise of two banks called Lehman brothers and Washington mutual fund. Both of these companies were part of financial sector. But unfortunately, during this period also, these two financial institutions declared bankruptcy. It badly effect the financial market and people also becomes risk adverse. They got panic and sell all of their investments and don’t think that it happens only in U.S. It happened all over the world.

Note- In our country also(india), there was a IT company called SATYAM and also got collapsed in the 2009 due to a financial scandal after one year of 2008 financial crisis. Now it got merged with tech Mahindra.

3

COVID 19, 2020

Another bearish moment of stock market is COVID 19. Well, this is the first time I could able see what is bear market. COVID 19 is a disease which spread worldwide. COVID 19 spread all over the world in 2020. This disease started from china and from there, this disease started to spread worldwide. A lot of country declare lockdown. Alot of country has suffered from recession at that time including india. But there was only one sector which was unaffected from corona and that is IT sector. Except IT sector, each and every sector got effected.

Obviously due to this disease the market for effected. Our nifty index goes down to 38% whereas sensex also goes down to 40% from their previous highs. Similarly, in us market also, S AND P also goes down to 34% and DJIA(Dow Jones industrial average). also goes down to 38%. This is the first time in my time where i could able to understand what is bear market. But after some time, market went up and up and up in such a way that no one could able to put their money in the market. Because that was too late and market was too overvalued also.

Note_ In all of these bear market incident, can u guys notice one important thing ? That important thing is that share market could able to recover out of these bearish moments and now u can see where the market is. So whenever any kind of bearish moments in the stock market arise, don’t panic. In fact, in the bearish moment, u should put more and more money in the market. I have written this article not to discourage u guys, but I have written this article in order to encourage u guys to put ur money in the market if such kind of incidents arise.