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Financial Center for Women

Brown Bear, Black Bear, What Do You See?

Brown Bear, Black Bear, What Do You See?

Author - Danielle Workman

On a recent trip to the Detroit Zoo, we saw an orphaned brown bear cub named Jebbie taking a dip in his swimming hole.  As he looked at the crowd watching his bath, the Eric Carle book I read to my children “Brown Bear, Brown Bear, What Do You See?” came to mind. Last week the S&P 500 dipped into Bear Territory and clients have asked me, “What do you see?” and “What should I do?”

First and foremost, do not panic!  Bears like most animals can sense fear.  That fight or flight response, fueled by endorphins, can be important to keep you alive when facing danger, but does not serve well as a behavioral response to financial decisions.  Don’t turn and run or try to climb a tree since bears are much faster and can climb better than humans.  Don’t liquidate your investments, or you’re likely to lose more than if you remain calm.  So, what should you do when you encounter a bear market?

The old adage about what to do when you see a bear in the wild: “If it’s black, attack; if it’s brown, lay down; if it’s white, goodnight” got me thinking about the correlation of what do with your investments and savings when you encounter a bear market.  Much of the response in a bear market is based on whether you are in a black, brown or white bear phase of your life or financial situation. 

“If it’s black, attack!”

If you have 10+ years until you need the money in your retirement account or investments, treat this bear market as you would encountering a black bear – ATTACK!  Just as if you encounter a black bear in the wild, you should stand your ground, stand tall and take charge, and smack an attacking bear in the face.  If you have time on your side with your money, consider buying while the market is down.  Let dollar cost averaging work for you as you invest new dollars into a volatile market.  As Warren Buffett said, “Be fearful when others are greedy, and be greedy when others are fearful.” So, pay attention and don’t follow the herd who sell and lock in losses, rather ATTACK and invest new dollars!

“If it’s brown, lay down!”

If you encounter a brown bear in your finances and have less time to recover, react just as you would facing a grizzly in the wild.  Slowly walk away avoiding direct eye contact with the bear by turning off the news, alerts, and stop looking at your statements or online balances.  Studies show the more frequently you look at your account balances and see the values change, the more likely you are to change your investments to more conservative choices, even going to cash.  The result is that you’ll lock in the damage and it’s hard to know when to reinvest, so if you’re tempted to change strategies, stop in your tracks, LAY DOWN and don’t move.  Try counting to 1,000 or waiting about 15 minutes, and the bear may leave thinking you’re dead and no longer a threat, allowing you to get to safety.  As an investor encountering the brown bear market, you should stop before making investment changes, LAY DOWN , count to 1,000 and call your financial advisor to see if you should slowly adjust your strategy and get to a safe place.

“If it’s white, good night!”

A two day old polar bear cub at the Detroit Zoo named Laerke laid down and stopped moving.  The zoo moved the grizzly cub Jebbie into the Artic Circle Polar Bear enclosure, and the two cubs became fast friends.  Although polar bear attacks are very rare, predominately because there aren’t many people where polar bears are found in the wild, if you encounter a white bear remain calm and move away slowly, as they are particularly deadly.  The best protection is bear spray, shouting or banging loudly or firing a signal flare to scare the bear away.  If a polar bear attacks, protect your head and core as much as possible to stay alive or it’s GOOD NIGHT.  If you encounter the rare polar bear in your finances, you’re probably in the wrong investments to begin with and should protect your core.  Try to move away slowly, shout for help and light a signal flare for a financial advisor to help. 

Three Bears

As we observe the new federal holiday Juneteeth that closed most banks and financial markets, let’s focus on the fact that brown and white cubs can live together as friends and ultimately help each other RECOVER from losses. Regardless of which of the Three Bears you’re encountering, we are here to help PROTECT you and your retirement savings from this Bear Market -– we’re even armed with bear spray and all the best strategies to KEEP you and your money SAFE.

The S&P 500 Index is the Standard & Poor’s Composite Index of 500 stocks and a widely recognized, unmanaged index of common stock prices. You cannot invest directly in an index.

Dollar cost averaging does not assure a profit or protect against loss in declining markets. Because dollar cost averaging involves continuous investment regardless of changing price levels, you should consider your ability to continue purchasing through periods of all price levels.

The opinions expressed are those of the author and not necessarily those of Lincoln Financial Advisors Corp.