WARNING: Graphic movie footage below that some may find disturbing...
Bear markets are both vicious and merciless and are equally treacherous to navigate. The bear usually strikes hard and unexpectedly, quickly knocking you down with insurmountably powerful blows, leaving you both stunned and breathless. Having survived the initial onslaught, thinking you have survived and that the coast is clear, you quickly find out that the bear is nowhere near finished with you. Just when it seems safe to move, it comes roaring back with another round of pain and brutality. It is not about winning, rather surviving as you stand next-to-no-chance of winning a fight with a full-grown bear. Rather, you can only hope that you have enough endurance and blood to survive the seemingly interminable attacks until it finally tires of ripping you apart and moves on. Then again, surviving a bear market is a victory in and of itself. The speed and destructiveness of the current bear market reminds me very much of the bear attack scene in the movie The Revenant (see graphic clip below).
Today’s bear market will no doubt leave a mark on history. It has surprised in its speed, depth, and unique non-financial cause which has left virtually no asset class unscathed. One of the most difficult things to do in a bear market is simply to not lose one's nerve and sell everything in a panic just to make the near-term pain go away (usually at the cost of longer-term gains). Often the most useful (while still painful) advice is to thoroughly review your portfolio, cull out the weakest links and stay the course, not letting the daily market volatility get the best of you. Admittedly, this can be a difficult task when the world appears to be ending and the realization sets in that it will take time to rebuild the capital already destroyed by the bear market. However, it can be even more difficult to get back into the market after the dust has settled--a big reason why bear markets of 2000-2001 and 2008-2009 were so destructive and cost so many so much (to be fair, many seemingly good companies went belly-up in the 2008-2009 market from leverage and exposure to assets falsely assumed to be safe while the Dot-Com blow-up saw many tech companies go out of business once investors realized that the companies would never make money).
Hang in there. Try to keep emotions out of investment decisions as much as possible. While the words may seem trite, this to shall pass and we will get back to more normal times. The market can certainly go lower from here in the near-term. If nothing else, extreme volatility is likely to persist until the underlying cause (coronavirus driven fear and associated fear of economic damage) peak. However, if policymakers (fiscal and monetary) make reasonably intelligent decisions relatively quickly, the damage can be contained and there is little reason to believe economic growth won't re accelerate once the worst is behind us.