Similarly, our goal is not to avoid “bear” markets and risk altogether. That is impossible (even holding cash carries inflation risk). Instead, a free market economy is built on competition. Companies compete to make products or services faster and cheaper and investors compete against each other for the most efficient financial participation in these companies (i.e. Shark Tank). The goal for investors, therefore, is to get the most reward for the risk that they are taking with their investments. And this often means “outrunning” the competition in bear (and bull) markets.
How? Remain diversified through disciplined investing according to your pre-determined investment plan. Do not chase or react to markets. Unfortunately, emotions war against our ability to do this. To begin, our brains are not wired for disciplined investing:
