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In today’s video, I will teach you how to invest in a bear market. More specifically, how wealthy people invest during a bear market.
At the time of this video, the S&P 500 is down 17.6% year-to-date.
Just a few weeks prior to that it was down over 20%.
A bear market is usually defined as a stock market decline of 20% or more.
Since we were technically just in a bear market, I think that this video is an important one to make.
The reason is that new investors could easily get spooked seeing their $1,000 turn into $800, or their $10,000 turn into $8,000 since the beginning of the year.
If you’re under 30 years old, you have never felt the pain of an extended bear market as an investor.
Yes we are technically in one, and yes we did have the crash from cerveza sickness in March of 2020, but none of you young bucks have truly seen a painful recession or prolonged bear market in your investing lifetimes.
As I’ve mentioned over the five years that I’ve been on YouTube…low interest rates, cheap debt, and unprecedented money printing have made everybody think that they are the love child of Warren Buffett and Peter Lynch.
Newsflash: you’re not.
A lot of you have learned a lot of bad investing habits over the past 14 years of easy money. What do I mean by this? I mean that a lot of you have forgotten to maintain a holistic overview of your financial health and perspective and have gotten used to “number goes up”.
Instead, you getting enticed by the next meme coin or meme stock that will 500x your portfolio overnight.
Investing is a get-rich slow game, and to play the long game, you need to have a strategy in place that you will stick to and not waver from every time market sentiment changes.
This video is going to boil down to essentially three things.
1. Big Picture Investing
2. Diversifying your portfolio with alternative Investments
3. Having a long-term plan and sticking to it
This sounds easy in practice, but not so easy when you see your net worth dropping by 30 to 50% like many did in 2008.
Watch the video until the end to learn more!
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⏰ Timestamps ⏰:
0:00 – Intro
0:41 – RANT
2:33 – STEP 1
3:44 – ASSET CLASSES
8:26 – MASTERWORKS SPOT
9:59 – STEP 2
12:01 – MY THOUGHTS
15:08 – LOL
ABOUT ME 👇
My mission is to provide my viewers with actionable content that enables them to create financial wealth. My videos reflect my real-world experience as a real estate investor, stock market investor, student of finance, and entrepreneur.
This channel allows me to share my passion for personal finance, stock market investing, real estate investing, and entrepreneurship. I produce content that I would want to watch, and because of that, I give 100% effort to every video that I make. I also believe in complete transparency and open communication with my audience.
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DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments.
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Hey everybody welcome back to whiteboard Finance my name is Marco and I'm here to Help you master your money and build Your wealth at the time of this Recording the S P 500 is down 16.3 Percent year to date just a few weeks Prior to that it was down over 20 Percent a bear Market is usually defined As a stock market decline of 20 or more Since we were technically just in a bear Market I think that this video is an Important one to make the reason for That is because new investors could Easily get spooked seeing their thousand Dollars turn into 800 or their 10 000 Turn into 8 000 since the beginning of The year in this video we're going to Talk about how to invest in a bear Market and more importantly how wealthy People invest in a bear Market stay Tuned if you're under 30 years old you Have no idea what a bear Market is yes We were technically in one yes we did Have the crash from cervasive sickness In March of 2020 but none of you Young Bucks have truly seen a painful Recession or prolonged bear Market in Your investing lifetimes as I've Mentioned over the five years that I've Been on YouTube low interest rates cheap Debt and unprecedented money printing Have made everybody think that they're The love child of Warren Buffett and Peter Lynch newsflash you're not so why
Am I starting the video off like this With this rant because a lot of you have Learned a lot of bad investing habits Over the past 14 years of easy money Especially over the past two or three so What do I mean by this I mean a lot of You have forgotten to maintain a Holistic overview of your financial Health and perspective and I've gotten Used to number goes up instead you're Getting enticed by the next meme coin or The next meme stock that will 500x your Portfolio overnight yeah right investing Is a get rich slow game and to play the Long game you need to have a strategy in Place that you will stick to and not Waver every time Market sentiment Changes this video is going to boil down To essentially three things big picture Investing diversifying your portfolio With alternative Investments and classic Investments and having a long-term plan And sticking to it the sound sounds so Easy in practice but not easy when you See your net worth dropping by 30 to 50 Percent like many did in 2008. there Have been 26 declines of 20 or more in The S P 500 between 1929 and 2021 and They lasted 289 days on average According to Ned Davis research found on Investopedia.com the reason I'm telling You this is because 289 days is pretty Long this gives you plenty of time to Take a breath and figure out how you
Want to deploy your money if at all so With this being said let's get into step Number one okay step number one is Big Picture investing okay this is how the Wealthy invest so big picture investing Is basically when in doubt zoom out I Have always been a big proponent of Having a diversified portfolio not just In stocks but also in alternative assets As well you want to diversify across Asset classes not just different sectors Of stock so instead of you know energy Tech growth small cap value whatever you Want to be be in completely different Asset classes so equities bonds real Estate which we'll touch on later here So some people call this diversification Other people call it diversification if You have a specific plan that works for You don't change it however the way that My wife and I look at our total net Worth is just like a pie with each slice Of the pie being a different asset class And each asset class Has a different weighting okay it's a It's a smaller or bigger slice of our Overall net worth so this is why I don't Worry when bear markets come around Because I've Diversified our net worth To the best of my ability the reason That I'm a fan of having a diversified Portfolio across many different asset Classes is because it typically reduces Volatility within a portfolio let's take
A look at some of these asset classes And figure out if they can be a part of Your portfolio as well okay so if you're Watching this on a phone this may be a Little bit small maybe you're watching On a tablet or on your TV but flip your Phone sideways so you can get make the Screen as big as possible so number one Is Cash Cash is both offense and defense So wealthy people they always keep a Little bit of cash not only as an Emergency fund but they also keep it as An opportunity fund or a war chest so When an opportunity comes during a bear Market you can scoop up assets when They're on sale I I hate that phrase Stocks are on sale like that's the Corniest phrase ever don't look at it Like that you just need to look at Finding the mean value of what you're Buying in and that way over time the Number will hopefully go up and to the Right again zoom out so number two is Stocks these are equities typically Dividends and growth are a good way to Mix so if you've had the Funny Money Printing and you've been successful over The past 10 to 14 years because of that Growth has absolutely crushed everything However now that we're in a bear Market Typically dividends tend to outperform As well as value stocks so you may want To have a small combination of all of Those number three are bonds
Specifically I Bonds in this case Especially in a high inflationary Environment these can actually be used As part of your emergency chest or Emergency fund just in a very very small Nutshell these are designed to actually Keep up with inflation so you see CPI Coming back at nine ten eleven percent That's basically what these are based Off of is whatever the CPI print is so These can be used as a way to at least Keep you from being a loser if if you Are a saver when it comes to inflation Eating away your purchasing power number Four is real estate this is tried and True in a lot of countries where people Don't have 401ks or Roth IRAs or all the Things that you know First World Countries may have when it comes to Pensions and retirement plans families Have typically preserved their wealth Using real estate and real estate Actually is considered an alternative Asset class if you don't have enough Money to invest in physical real estate Or real real estate or commercial real Estate you may want to look into either Syndications or you can even look into Platforms such as fundrise for example Which you can invest in actual tangible Real estate just doing it through a Third party the fourth or the fifth one Excuse me is PM that stands for precious Metals these are a typical gold and
Silver bars physical bullion I'm not Talking about a gold ETF I'm not talking About gold paper I'm not talking about Any of that stuff I'm talking about the Actual physical bullion number six is Bitcoin notice how I say Bitcoin and not Crypto 99 of crypto is garbage which I've been saying for about three to four Years now once you understand money once You understand how Bitcoin works it's Basically digital gold it replicates Gold's properties but for a use case in The 21st century if you don't know Anything about Bitcoin please don't Leave an ignorant comment in the Comments section below you're basically Going to be telling the whole world that You don't understand how money works or How Bitcoin works if you want to Understand how Bitcoin works I suggest You read the Bitcoin standard uh Inventing Bitcoin and also also the Bullish case for Bitcoin once you read These those three books then you can Form an opinion on your own number seven Is land a lot of people don't talk about Land as an alternative investment land Is great because you can develop it you Can grow things on it you can use it for Investment purposes you can use it to Preserve wealth if it's going to be in The path of progress meaning that you Know jobs are going that way Um you know homes are being built that
Way infrastructure is being built that Way highways schools things like that as Long as you hold land in an area where The popular is rising or if you're going To use it to grow things land is a great Investment for the most part and then Finally we're going to talk about Collectibles such as cars or artwork and Other Niche categories that you may know About that other people don't you know Cars if you look at Porsches over the Past three years they've exploded in Value if you look at you know classic Cars if you look at artwork if you look At things like that those have all done Very very well if you know about a niche That other people don't know about leave A comment down below if you want to Share some of your high Roi niches that Others may not know about my dad and I We just sold a 2005 Carrera S we bought It in the low 40s sold it in the low 50s Held it for I think about four years and That same time the S P 500 gained like 12 percent the Porsche gained like 12 Percent I I can post the actual numbers On the screen here so if you have any Other high Roi niches down below that Others don't know about if you want to Share it go ahead if you're interested In investing in shares of artwork here's A word from today's sponsor Masterworks Where to invest is a question on Everyone's mind right now after all
There have been days this year where 99 Of stocks have lost value of course any Single day doesn't make the market and Stocks are long-term Investments but We're all thinking hey I'm Diversified Why is my portfolio still getting Wrecked well Goldman Sachs has released A shocking report saying the classic Stock Bond strategy won't be enough to Keep investors afloat it's actually down 34 percent this year alone its worst Performance in literally a century as You can see from this graph right here As a result Goldman says the ideal Allocation for stocks has shrunk from 60 Percent to around 45. so what do they Recommend you do with that difference in Order to salvage some of your returns Invest in real assets like Fine Art I Know it's surprising but Goldman Sachs Says Fine Art can protect your Purchasing power even in the face of Rising prices the last time inflation Was this High it appreciated an Incredible 17.5 percent per year on Average the Masterworks platform Qualifies their paintings with the SEC Turning legendary art into an actual Investment for a fraction of the full Price they've had a total of eight exits With five of them this year alone Masterworks last three exits delivered 17 21 and 33 net returns one of those Was literally a few weeks ago for a 17.8
Percent net as a result Masterworks has Had to acquire and release more art on Its platform to meet demand and there is A wait list but you can skip this wait List by clicking the link in the Description and signing up for Masterworks today okay thank you for Sitting through that ad spot this is how I pay the bills and provide all this Content for free the next part of this Video is more philosophical than Tactical so what do I mean by this the Next part of this video is having a Long-term plan and sticking to it you Need to stay the course and Trust the Process and understand why you're Investing in the first place okay why Did you even start doing this because if You don't understand this you're going To panic and hit the sell button button The second your portfolio is down more Than ten percent every successful Investor that I know typically sticks With what they do best during bear Markets rather than tinkering with their Portfolio so stick with your bread and Butter if your bread and butter comes From your W-2 income from your job then I would do everything in my power to Make myself indispensable to my company Or work on my business so that I can Weather the storm while you're still Generating income from your W-2 or from Your business I would dollar cost
Average into the bear market so that When things do come back up again zoom Out not only were you buying assets at a Discount you stayed the course the Entire time and didn't make drastic Decisions I can't stress this enough Don't do anything drastic and do not Panic don't do anything different than What you were doing in the first place When it comes to investing the market Rewards patience this is where I can see Having a coach or financial advisor Could provide the most benefit to a Retail investor who may get spooked at The first sign of a bear Market I Remember when I was still doing Consulting calls someone called me in April of 2020 after the huge dip in the Market and they asked me if they should Sell all of their stocks and liquidate It into cash I told them that that was Absolutely a stupid idea but I was also Continuing to keep dollar cost averaging Into the market myself a few months Later the market hit new all-time highs If that person would have sold at a 20 Or 30 percent loss and missed out on all The new all-time highs they would have Lost a ton of money just because they Panicked and they weren't patient the Stock market has averaged close to 10 Percent per year over the last 50 years Remember when in doubt zoom out okay and As always I'm going to leave you with my
Thoughts at the end of the video so Three very quick points bear markets Will test you again what I just finished Talking about was how this kid called me Said hey you know should I sell I'm down 20 30 percent I said absolutely not I Just told them exactly what I was doing I'm going to keep dollar cost averaging Bear markets are going to test you when You log into your Schwab account and see That your 100 Grand is turned into 60 You're going to say holy crap I'm Pulling this out before I lose any more Well all you have to do is zoom out just Go on to Google type in S P 500 chart Hit lifetime or Max and see what it's Done over time you will be rewarded for Your patience trust me number two is Diversify assets again not looking at Different sectors of equities or sectors Of real estate or sectors of one thing Diversify asset classes if you're not a Professional investor and you're not Laser focused on something like real Estate or laser focused on trading a Certain sector of stocks or laser Focused on whatever it's going to Behoove you to be Diversified if you Have a day job if you run a business if You're bread and butter or something Else other than being a professional Investor diversification will benefit You in the long run and will help you Sleep better at night because it reduces
Volatility and then number three as long As the dollar is strong you're good okay What do I mean by this oil is traded in Dollars this is the petrol dollar we're The world's Reserve currency uh the United States biggest export is dollars Okay so as long as other countries still Have demand for dollars and our economy Is still doing well based on this fact Uh you're gonna be fine is that going to Be the case 100 years from now I have no Idea okay 100 years from now we may all Be speaking Chinese right uh so you see Other countries like the brics Brazil Russia India China South Africa they're Starting to get away from the dollar Because of this exact reason it's too Strong so in our lifetimes we're going To be good however if you start to see Little things crack away like let's say Petrodollar goes away let's say Something else becomes the global Reserve currency which in our lifetimes Most likely won't happen this is when You start worrying about other things Than just your portfolio so as always I Hope you got value out of this video uh Please hit the like button please share The video this channel has 915 000 Subscribers my last video got like 10 000 views okay so Um I I don't want to do the flame Thumbnails I don't want to do the Clickbait I'm too old for that I don't
Want to do it but it does work so part Of me is like ah do I just do it part of Me is like that's not me who I am as a Person Um I don't know I don't know it's kind Of a pickle you know you don't hate the Player hate the game don't hate you know The people doing the thumbnails and the Titles that are obviously inflammatory And click bait you know I hate that the Algorithm promotes that kind of stuff And also you should hate yourself for Being dumb enough to watch those kinds Of videos and click on them telling the Algorithm hey more of these flames and Rocket ships right so I'm just playing At the end of the day share the videos These are all free that's why I take Some of these sponsors like Masterworks Like policy genius it's just a way for Me to continue paying myself and making This content for free so as always thank You so much have a prosperous day Hey yeah I just finished the sponsored Video Oh okay Um oh everyone lost their money oh it's Okay I just uh virtue signaled on social Media now I can sleep at night Oh okay yeah I just made a tweet I made It sound like I cared Okay Um yeah I'll meet you later I just gotta Stop at the bank real quick okay thanks