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Wrestling with the Bear

Despite Tuesday's brief respite, which saw modest gains in all three major market indices, the markets continued lower Wednesday. The S&P 500, along with the Nasdaq, is firmly in bear territory (defined as a 20% drop from its high point), and the Dow fell below 10,000 for the first time since mid-October of last year. The Dow first passed the 10,000 mark back in March of 1999.

Now more than ever, it's time to be careful out there, and in particular to consider your own unique situation. Should you sell stocks, or buy them? How should you handle this bear market? We've assembled some recent articles that address these questions, and others.

Five Reasons to Sell

With the market down, should you sell your stocks? While Fools prefer to buy and hold for the long term, it's worth keeping a few things in mind: If you expect to need money soon, aren't closely familiar with your holdings, are eyeing better opportunities, have watched your favorite company morph into something unfamiliar, or can't sleep at night -- you might want to consider pressing the "Sell" button.

Five Reasons to Buy

The market has beaten up most investors this year, but all hope is not lost -- and you might even want to consider buying in these conditions. If you see bargains everywhere you look, won't be dipping into vital savings, can take advantage of dollar cost averaging, have a stomach for volatility, and can afford to wait for years to see your investment decisions pan out, it may be a good time to look for stocks.

A Cautious Investor's Credo

Fool writer/analyst Richard McCaffery discusses some of his investment principles, which include: investing in high quality companies; not investing in unprofitable companies; seeking a margin of safety; and understanding that investing in stocks isn't easy.

Nasdaq 2000: Lessons Learned

About a year after reaching its all-time high, the Nasdaq plunged below the 2,000 mark for the first time in over two years earlier this week. Eight Fools discuss what they've learned about investing during that tumultuous year.

Going Against the Herd

Fool scribe Brian Graney discusses why individual investors may have an advantage over Wall Street pros during periods of increased uncertainty such as the current market environment. Everyone must contend with the powerful psychological force of "the social proof," in rising markets and in falling ones. There are additional structural features, however, that promote herding behavior on the institutional level that don't apply to the individual.

Bear Markets are Natural

As painful and unpleasant as they are for those of us riding them out, bear markets are not unusual. Jeff Fischer writes that a bear market has occurred on average once every five years since 1956, making them a common part of investing. The best way to avoid them is to be invested for longer than they last. Most times, the stock market returns to previous peaks within a few years of a bear market's end.


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