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Tata Capital > Blog > 2022 Stock Market CRASH? How to Profit in a BEAR Market?

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2022 Stock Market CRASH? How to Profit in a BEAR Market?

2022 Stock Market CRASH? How to Profit in a BEAR Market?

You know what they say on Wall Street – ‘If you don’t sell it, you haven’t lost it.’ This holds especially true during a stock market crash when the stock prices fall like rain from the sky. However, folding your losses aside, such bearish corrections offer ample opportunities to book handsome gains. 

So, if you can find good quality stocks at a bargain, you can benefit from the bull rallies later. Wondering how? We’ve got you covered. 

Here are five ways to make the most of the market crash 2022. 

Don’t try to time the market

Investors who believe they can time the market and get the best bargains on shares are, well, living in denial. It’s all a game of luck, really.

In a bear market, therefore, you shouldn’t worry about getting the lowest price when buying equity stock and mutual funds on dips. Stock prices may or may not fall after you buy them. Instead of mourning that loss, focus on building a portfolio for a longer horizon. 

Additional Read – Russia Ukraine Conflict: What Does It Mean for Investors?

Invest in dividend stocks

If the turbulent bear markets ever have a rainbow, dividend-paying stocks are the pot of gold at its end. Since dividends are offered from the company’s net income, they are not affected by a rise or fall in the stock market. So if the company is profitable, you can earn good gains from the dividends. GAIL and Infosys are some excellent examples of the same.

So, when the bears arrive in the stock market, start hunting for dividend stocks.

Look out for the AAA rating

A stock market crash is hard-hitting for any company. However, for the bad ones, it can be deadly. You can see exactly how much debt a company is shouldering or if they’re managing it.

If you want to look for concrete proof, check out their bond rating that gives a bird’s eye view of the company’s creditworthiness. Companies with A, AA, and AAA ratings are considered least risky, while those with Bs or Cs signify poor creditworthiness. 

To make the most of falling prices, therefore, hunt for stocks of companies with a bond rating of AAA, solid balance sheets, and clear competitive advantages. 

Defensive stocks for the rescue

When the economy is tanking, try switching to defensive stocks. These include stocks of companies in sectors like food and beverage, utilities, etc. Since they come under the “consumer essentials” category, they tend to perform well despite the sharp declines in prices. They also offer stable returns and consistent dividends.

So, if you don’t want to exit the bear market entirely, defensive stocks can become your safety net. 

Additional Read – 5 Things to Do When Stock Market Crashes

Just Wait and Watch

When the stock market is going through a frenzy, staying put seems counterproductive. However, sometimes, doing nothing is the better approach.

If you have a long-term strategy in mind, bear markets should not scare you. Instead of moving in and out of stocks, use the time to see how the companies you’re invested in are faring and plan your next move accordingly. 

To get all the stock market juice under one roof, join the Moneyfy app.

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