As investors, we view bear markets as a natural part of the investment cycle. However we understand that losing capital is never an enjoyable experience and in this article we share our thoughts on how investors can identify the warning signs of an approaching bear market.
As investors, we view bear markets as a natural part of the investment cycle. And while losing capital is never an enjoyable experience, bear markets should not be feared as they tend to present fantastic opportunities to purchase high quality businesses at depressed prices. It is these high quality businesses with strong balance sheets and good management teams that can consolidate their competitive position during these periods and emerge even stronger.
However, during the initial stages of a bear market high quality stocks are likely to see their price fall along with lower quality stocks. It is therefore important for investors to know how to identify the warning signs of an approaching bear market.
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