Should You Be Afraid of a Bear Market?

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"The bear is coming! The bear is coming!" Indeed, it is. Should you be worried?

No, if you have heeded my advice and diversified your portfolio and set aside a cash reserve. You can stop reading now.

For everyone else, the answer is "probably not."

We’ve been on the cusp of a bear market for several weeks, which would be the 29th bear market in U.S. stocks since 1929.

Because of the media’s fixation on the stock markets, you probably have not heard of the bear market in bonds, which is the first since the 1970s and, by some measures, the worst bond returns since 1842. Interest rates have been in a huge bull market for 50 years, which means they’ve steadily fallen. That trend has reversed now that they’re rising.

The prevailing emotion when any market is falling is anxiety. The cause of anxiety is a feeling of worry, nervousness, or unease, typically when we anticipate a negative outcome to an imminent event or uncertainty.