A 2 minute Blog on Bear Market Rules

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This came round on Twitter yesterday and I thought it was utterly brilliant and something worth thinking about and understanding if we want to survive the current Nasty Markets. I say this is a “2 minute Blog“, but take your time and think about the messages here - they are bang on the money. It uses the word ‘Trader’ but equally applies to Long Term Investors and it is worth taking heed.
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Many thanks to Olivier Tischendorf for sending this round and the original source can be found here:

http://stocktwits.com/Tischendorf/message/49335972?utm_medium=community-twitter&utm_source=t.co&utm_campaign=outboundteam

“This is what characterizes Bear Markets:

• Sellers are in control.
• Oversold stays oversold for a long time.
• Markets drop a lot faster than they go up.
• Bear Markets burn and churn accounts with long only exposure.
• Volume and liquidity can dry up but price can still drop significantly.
• ‘Cheap’ can get a lot ‘cheaper’.
• Hope is slowly destroyed.
• Vicious Bear Market rallies try to suck in traders to trap them.
• Expect lots of gaps to the downside.
• It takes a long time until market participants throw in the towel.

This is appropriate Trading Behaviour during Bear Markets:

• Either in Cash or Short.
• Sell the Rallies mentality.
• Do NOT buy the dips.
• Do not even think about going Long if you are not an active and experienced trader.

How To Survive A Bear Market - Trading Rules And Guidelines
This is not simply a correction. This is most likely a new BEAR MARKET. And that is probably an understatement. This could turn out to be a really nasty bear market. We do not know yet how this is going to end. But this quote certainly nails it.”