The most optimistic man I know has the philosophy that there are no bad times in life, only good times and learning times. I believe that a similar philosophy can be carried over to the stock market, but one that is even more optimistic.
If you think about it, there are two times in the stock market, good times and buying opportunities. If you view it that way there really are no bad times in the market. But that philosophy requires two things. First, that an investor have a long term horizon in the stock market. Stocks are long term investments, and it’s the people who try to turn it into a short term quick profit that often get hurt. The second, is investing in profitable companies. A profitable company cannot go out of business, and their stock cannot go to zero. The same cannot be said for unprofitable companies, as many have proven this past year.
Looked at through the optimistic (but realistic) view about the stock market, a bear market is good news. It’s an opportunity to actually pick up some real bargains. There were virtually none available a year ago, but prices are getting more reasonable. Just so long as we keep the basic rules of stock buying in mind. We want: a) A good company, b) A profitable company and c) We want to buy it at a really good price. Just because a stock came down doesn’t necessarily make it a bargain.
It doesn’t remove all the pain thinking of “Good times and buying opportunities” but it can really take the edge off.