If you're feeling nervous about the stock market right now, you're far from alone. This year hasn't been easy, and periods of volatility are difficult to stomach -- even for seasoned investors.
The good news, though, is that no downturn will last forever. Every single bear market in history has eventually given way to a bull market. While we don't know precisely when that will happen, better times are on the way.
In the meantime, the right strategy can help you prepare for the inevitable bull market. And there are three moves I'm making right now to maximize my earnings during the upswing.
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1. I'm continuing to invest
When the market is bleak, it's tempting to press pause on investing until prices begin to bounce back. But if you stop investing now, you're missing out on an incredible opportunity to build wealth.
Falling stock prices aren't necessarily a good thing, but they do allow you to invest in quality companies at a steep discount. In addition, you'll also be setting yourself up for potentially lucrative returns when the market rebounds.
For example, if you had invested in an S&P 500 index fund in early 2009 -- at the index's lowest point of the Great Recession -- you would have nearly doubled your money in the following two years alone.
In the wise words of Warren Buffett: "Bad news is an investor's best friend. It lets you buy a slice of America's future at a marked-down price."
2. I'm keeping a long-term outlook
It's tough to avoid getting caught up in the market's daily fluctuations during periods of volatility, and it's especially difficult to keep a clear head when it seems like there's bad news around every corner.
Try your best, though, to maintain a long-term outlook when investing. The stock market has been around for a long time, and it's seen some horrendous economic downturns. But even the worst crashes, recessions, and bear markets were temporary.
Over the last two decades alone, the market has faced the dot-com bubble burst, the Great Recession, the COVID-19 crash in 2020, and countless smaller corrections along the way.
Despite this roller coaster of ups and downs (along with the current bear market), the S&P 500 is still up more than 165% since 2000.
Regardless of what happens over the coming weeks or months, the market will eventually recover. By staying focused on the long term, it can be a little easier to tolerate the current volatility.
3. I'm doing my research
Continuing to invest during downturns and keeping a long-term outlook are only part of the equation for surviving a bear market. It's equally important to ensure you're choosing the right investments.
This is especially critical right now, because it can be harder to separate the good investments from the bad when stocks across the board are sinking. But if you invest in the wrong places, your stocks may have a harder time recovering from this bear market.
To ensure you're only investing in strong stocks, it's wise to focus on underlying business fundamentals. Companies with competent leadership teams, healthy financials, and a solid competitive advantage, for instance, are far more likely to rebound. The more of these stocks you have in your portfolio, the better off you'll be.
Nobody knows for certain when this bear market will end, but a bull market is on the way. The more you prepare now, the more you can potentially earn during the recovery period.
