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The Bear Market

Let me start with the basics, not the birds and the bees, the bulls and the bears.  Bulls and bears are common references on Wall Street and within all financial markets.  When a bull attacks it thrusts its horns up, when a bear attacks it will swat downward.  So we refer to increasing prices in the market as a bull market and decreasing prices as a bear market.  Bulls go up, bears go down.  Sometimes you will hear traders talk about them like sports teams, saying “the bulls have GE this morning and are charging higher.”  Another example is “The bears took control late in the day and TSLA ended up closing down.”

The thing to remember is bulls go up and bears go down. Congratulations you have added to your knowledge of the stock market!

Investing in a Bear Market

Last week the markets were only open for 4 days; Friday the markets were closed for Good Friday.  The short week in the market was not without its fair share of drama.  The markets opened on Monday with some of the most impressive single day gains the market has ever seen.  Still, after the massive sell-off the Friday prior, many experts are warning of an impending decline.  The markets are mostly flat for the year to date and are having trouble maintaining any momentum.  This should not worry investors; if you are in it for the long haul, don’t worry about this impending decline that may or may not happen.  The only thing you should be trying to do is invest more into the market, because all the stocks are now on sale and might get further discounted in the coming months.

Dow Jones Year to Date

In my IRA I am investing by stashing money away for the long haul and riding the waves of the market. I have been getting out of individual stocks and looking exclusively toward investment funds.  If you want to learn more about investment funds follow this link to my post on that topic.

IRA Transactions

3/27
Bought 1.658 shares for PRGFX for 66.36 each, total cost $110.00

3/28
Sold 51 shares of NTDOY for $54.80 when it hit its stop-loss price.  Total sale $2,789.77

3/29
Bought 43.551 shares of PRGFX for $64.04 each, total cost $2,789.00
These shares were bought at a much lower rate than earlier in the week.  In my eyes this is great because I got more for my money.  These shares will not be sold for several years so when the market contracts I always try to buy more of them.

3/30
Contributed $110 from my paycheck

Trading in the Bear Market

I have 2 brokerage accounts which I am attempting to use for short-term profits.  My strategy will be to limit my losses as the markets contract and look for opportunities to profit.  As the market dropped I did set several stop-loss orders and they began executing quickly.

E*Trade Brokerage Transactions

3/26
This was an up and down day, I took the opportunity to buy 489 shares of AMD, $10.22 each, total cost $5,002.04

3/27 The sell-off begins
Sold, 1 share AMZN for $1500.00, total sale $1,495.01
Sold, 489 shares AMD for $10.42 each, total sale $5,090.25
Sold, 48 shares ARKW for $50.00 each, total sale $2,394.98

3/27 I did try to make a few day trades without much sucess
Bought 16 shares of NFLX for $304.05 each, total cost $4,869.75
Sold the same share for $300.00 each, total sale $4,794.93, a loss of $74.82
Bought 488 of AMD for $10.20 each, total cost $4,982.55
Sold the same share for $10.05 each, total sale $4,899.27, a loss of $83.29

3/28 the sell-off continued as more of my positions met their floor (stop-loss target).
Sold 16 shares of TSLA, $263.92 each, total sale of $4,217.67 a loss of $757.12
Sold 50 shares of WDC for $91.50 each, total sale of $492.52 a loss of $492.52
Sold 76 shares of MU for $51.50 each, total sale of $3,928.95 a loss of $731.21

As the sell-off continued I looked for oppertunities to buy some stocks.
Bought 3 shares of AMZN for $1,437.91, total cost $4,318.67
Bought 162 shares of SH for $30.91 each, total cost $4,984.83

SH is an ETF that takes broad shorts of the market.  Shorting a stock is a process that allows you to bet that prices will go down.  I will be making my first short trade this week, so don’t forget to check back.

Robinhood Brokerage Transactions

3/27
Sold 4 shares of WMT for $85.91 each, total sale $343.64
Sold 19 shares of BAS for $14.14 each, total sale $268.68
Sold 20 shares of AMD for $10.00 each, total sale $200.00
Sold 3 shares of TSLA for $278.04 each, total sale $834.11

3/28 I saw an opportunity for a day trade
Bought 400 shares of GERN for $3.68 each, total cost $1,472.00
Sold the same shares for $3.96 each, total sale $1,582.00.  Profit of $110, 7.4%

Final Notes

At the end of the week I was holding more cash than usual and watching to see what the market was doing.  Virtually every one of these stocks that I sold have dropped lower.  Being that I am an active trader I will watch for opportunities to buy back in at a profit from these stocks as they begin to rise again.

This year I have lost about $1,500 in the market.  I am, however, learning the process and I knew I would have to trade in a down market at some point.  Bear markets are a natural part of the stock market and traders need to know how to trade them.  Bull markets are easy, I made over $5,000 last year just getting started.

The market may stabilize soon if the trade war settles down.  I mentioned last week that there are no real winners in war.  American businesses are extremely resilient but the uncertainty coming from the current administration does have far-reaching effects on the market.  Trump may get us in a better position in the end, time will tell.  The markets hate uncertainty and as long as our trade policies are up in the air, be prepared for choppy waters.

Check back later in the week for my story of my visit to Wall Street, I even got to see where the wall once stood!

Thanks for reading and happy trading!  Please post your questions below.

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