The stock market is crashing! As a result, it is time to say “Hello” to a bear market. The S&P 500 closed down on Monday June 13, 2022. This down turn puts the S&P 500 down more than 20% year to date which puts it in a bear market. The S&P 500 joins the NASDAQ in bear market market territory as the NASDAQ is down over 30% for the year. What do we do now? Is time to panic and sell everything? Below, I will discuss my thoughts on this bear market and what my financial plan is to deal with the current market conditions.
Market Headwinds
The stock market has been facing headwinds all year. Some of these headwinds include rising inflation, supply chain issues, the Fed raising interest rates and geopolitical unrest. Because of the headwinds, it seemed inevitable over past few months that we would enter into a bear market. The NASDAQ has been in a bear market for awhile and the S&P 500 has joined the NASDAQ in the bear market.
My Plan
Since the stock market has fallen into a bear market, is it time to panic and sell everything? My answer to this question is no. I continue to follow my financial plan and continue to dollar cost average into the stock market. In fact, I have been added more than usual to my Roth IRA as the stock market goes down. The additional amount has only been $100 or so here and there when I have a little extra cash because I am still maintaining a balance between building back up my emergency fund and investing.
Looking Forward
A bear market is something I have been looking forward to experiencing. This may sound strange to some, but I view this as a learning opportunity. My end goal is to create enough income from my investments in order to retire. The income from my investments will be mainly from dividends and options trading. By being in a bear market, it will allow me to see how my investment plan holds up in a down market.
So far, the dividends continue to come in and grow. Also, I have learned that trading options in a down market can be difficult. Lately, it has been difficult for me to generate good premium from my options trades. This is due in a large part to being mainly on the call side of my options trades and not having enough cash in the account to sell puts. Like I said above, this is a good learning experience for me.
Conclusion
So, while many are panicking and selling out of the market, I am saying “Hello” to this bear market. I look forward to seeing how my strategy holds up and make adjustments to my strategy if necessary. Because my focus is on the long term, the short term drops in account value don’t bother me much. Besides, when the market goes down there are a lot of quality companies on sale. While I am still in the accumulation phase of my investing journey, this could be a great opportunity to build wealth for my future. That’s it for now. Thanks for following along!
*Disclaimer – I am not a financial professional. The information shared here should not be considered financial advice. I am just a factory worker sharing my experience as I strive to achieve financial freedom. Before investing or making any financial decision do your own research and due diligence or consider seeking the advice of a financial and/or tax professional.
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