Bear Market Explained + Reflections on Staying Calm

This is a summarized version of an email I shared with my current clients and students on Wednesday, March 11, 2020.

This was sent immediately after I heard about the DOW going into “bear territory”.

Below, I share in plan English what that means and my thoughts about it.

Enjoy! 🙂

*****

Hello, ladies!

I just received a notification on my phone from the Wall Street Journal letting me
know we’ve entered a “bear market”.
 
This simply means that certain stock market indexes (the DOW Jones in this case) have dropped by more than 20% from its highest level which was back in February.
 
To put this in plain English: The DOW Jones is composed of 30 publicly traded companies. 
 
A drop of 20% means that the majority of the stocks within the DOW have dropped in value.
 
The DOW’s “value” is essentially an average of all those 30 companies. 
 
And so, simple math will tell you that if the value of each individual company drops, so will the overall average.
 
Understand this: 
 
The value of each of these companies has decreased because of fears of the coronavirus and its impact as a whole. 
They have not decreased because there is something “wrong” with those businesses specifically.
 
I remember going through this “downturn” back in 2008, about 3 months after I started to invest. And so, I completely understand how some of you might feel.  
 
I clearly remember how the stocks I had bought just a few months before dropped in value very notably – some by 40%!!
 
Instead of worrying or panicking, however, I somehow understood (even with my very minimal experience in the markets back then) that it would all be temporary. 
 
That eventually things would turn around.
 
And that’s exactly what happened.
 
You could have bought stock last week or this week and the value might be lower than what you paid. That’s normal considering what is going on right now.
 
Just remember you haven’t lost any money unless you manually SELL.
 
I clearly remember how I remained patient back in 2008 and didn’t sell anything.
I bought some stuff here and there but overall I remained PATIENT.
 
That patience paid off eventually.
 
If you have any questions or want to share anything with me, reply and let me know!
 
As a member of the accountability program, I am reaching out to you all FIRST before I reach out to the Girl$ on The Money community as a whole. You ladies are my priority. 
 
Your calmness and peace of mind are important to me.
 
I want you to know you have me here for support regardless of the market being up, down, sideways, or just plain crazy.
 
The market can be very volatile in the short term but rewards patience – think long term.
 
Hugs from the Girl$ on The Money headquarters!
 
Mabel

*****

Courses & Resources:

Ready, Set Invest: A Crash Course on Being Ready to Invest – For details of this 1-hour workshop taking place on Monday 03/16  you can click here.

Stock Investing Bootcamp: Enrollment for this class is officially OPEN and the course begins on 3/23. This is a 5-week course all about stock investing and how to make educated and profitable decisions. To receive details, Click here.

Understanding Your Investing Options: Starter Guide for Beginner Investors: New to investing and not sure where or how to begin?! This guide is for you! Check out details here.

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