Tips for not getting a Bear of a Headache from a Bear Market w Alternative Investments

Bear markets are only the label slapped on markets that are scaring the public away. Alternative investments in bear markets suffer faster and more than the standard fare of index funds, bonds, etc. Small capital mining stocks have dropped by 50% or more from their highs, and some as much as 80%. Silver is off from around $46 to $27, while the S&P500 has only dribbled lower in a band of less than 8% in the same time period.

We associate the phrase “Bear Markets” with losses. Usually losses exceeding the profit s we may have accumulated from the Bull Market phase.

Bull markets make almost anybody look smart.

Bear markets make almost anybody that holds on for dear life look dumb.

As someone that produced over 300% returns during this “Bear Market” by using alternative investments, here are the lessons learned that took a bear market for most investors into a bull market for Financial Survival Center portfolios.

5 Key Approaches for Conquering a Bear Market with Alternative Investments with Commodities, Precious Metals, Foreign Currencies, and Dividend Plays

Tip #1: For every Bear market in a trade, there is a Bull market in another trade.

For example – If we hold a position with a broad market mutual fund, and the market is falling – as it is now – then we are experiencing the Bear end of the market. The speculator that either bought an ETF that was focused on shorting the market, or bought options that shorted the market, is experiencing a Bull market in their trade.

There is always money to be made, as long as we are on the right side of the market.

Tip #2: Popularity is our enemy. When a sector we are invested in becomes a darling of the market, the Bear market is about to grab it by the throat and squeeze the life out of it. We can know when to reduce exposure to a trade as the volume reaches too high a level, it flies up too fast, and the hot money runs in. Let them buy the market tops. We want to be the ones to sell it to them.

Tip #3: Bear markets include some of the biggest bull markets of all. During the great depression, the Dow rocketed almost 500% from 41 to 194 over a 5 year period. If we are locked into the previous trend and expecting it to continue on and on, then we will be wrong footed on every profit opportunity. Monitoring basic market numbers – volume, moving averages, historical price/yield, etc. give us the information to make the hard decisions to speculate on down trends becoming up trends or vice versa – and capturing the huge profits.

As an example of this, I have been shorting copper and silver ever since they hit their recent highs, even though I know long term their prices will be higher.

Tip #4: Bear markets favor alternative investments. Mainstream media declares Bear Markets based on what the well known indexes are doing. Meanwhile, the alternative markets – unloved, ignored by the analysts from the main investment houses, and under-owned could be rising by 20% per year and will never have the light shined on them, until it is too late. The only place to be in a Bear Market – is where nobody wants to go. That is the alternative investment areas of commodities, metals, mining companies, and areas that protect against the main risk in the market- debt and currency collapse.

Tip #5: Bear markets present the greatest profit opportunities – for those who do not run into cash.

This advice echos Buffetts famous quip: “Be greedy when others are fearful, and fearful when others are greedy.” With the general U.S. Market having done almost nothing since 2000, the yields on government bonds have shown that everyone – institutions included – has run into cash and cash equivalents. Brave speculators rushed instead into alternative investments – and trounced the fearful cash holders by more than 100% in R.O.I.

Following these tips in Bear Markets will lead us against the heard. During Bull Markets, the same form of thinking will again lead us against the herd – after we have drunk our profits from the same watering hold. We will be on to greener and untrod pastures long before the Bull Market trough dries up and leaves the herd parched and broke.