Managing money and investments in a bear market requires extreme discipline
Peter Oberois
Oct. 21, 2007

The stock market and the real estate market have seen a continuous rising market for the last sixty-five years. The cycle has changed. The trend is down long-term for the first time.

Managing money in the down markets is very tough. The bear market rallies kill the portfolios of short sellers. Short covering in bear markets in common and the rallies are sudden and violent.

The real estate and the stock market have entered a bear market era. Many money managers never saw a real long term bear market in their lifetime since the last one happened in very early eighties.

Extreme discipline and very careful investing help in these tough times. The bear market that we are experiencing can stretch twenty to thirty years before the next bull market.

| Short selling is an option in the stock market. But special precaution must be taken to hedge the positions in case a bear market rally starts rolling from panicked action of other short sellers. The down side prediction of individual companies are always tough proposition. It is far easier t o project how good a company will perform than how poor a company’s financials will manifest.

The next very important thing is not to invest 100% in a bear market. Bear markets end all on a sudden, changes direction all on a sudden and can actually go flat or in base building mode for an extended period of time. The simple fact is that the bear market behaviors are very unpredictable. That makes it very tough to manage money and positions unless hedging is applied and a small percentage of the capital is deployed.

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