CLASSES TO GO!

Advantages of a Bear Market

Allen Holdsworth BIVA Board Director

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Disclaimer• The information in this presentation is for educational purposes only and is not

intended to be a recommendation to purchase or sell any of the stocks, mutual funds, or other securities that may be referenced. The securities of companies referenced or featured in the seminar materials are for illustrative purposes only and are not to be considered endorsed or recommended for purchase or sale by BetterInvesting™ National Association of Investors Corporation (“BI”) or the BetterInvesting Volunteer Advisory Board, its volunteer advisory board (“BIVA”). The views expressed are those of the instructors, commentators, guests and participants, as the case may be, and do not necessarily represent those of BetterInvesting™ or BIVA. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

• Securities discussed may be held by the instructors in their own personal portfolios or in those of their clients. BI presenters and volunteers are held to a strict code of conduct that precludes benefiting financially from educational presentations or public activities via any BetterInvesting programs, events and/or educational sessions in which they participate. Any violation is strictly prohibited and should be reported to the President of BetterInvesting or the Manager of Volunteer Relations.

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Advantages of a BearMarket

Yes there is a positive side to a Bear Market!

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What is a Bear Market?

• A decline of 15-20% of the broad market coupled with pessimistic sentiment underlying the stock market.

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Dow Jones

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The last Bear market

• Sept. 30, 2002 Dow 7528

• Jan. 5, 2004 Dow 10,568

• Oct. 8, 2007 Dow 14093

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Why a Bear Market happens?

• Realization of stock fundamentals

• Economic downturn

• Household savings

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Bear Market Education

• Learning experience

• Where did I go wrong

• Review SSG

• Is my portfolio balanced correctly

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What should I do now

• Review SSG for corrections in judgments

• Decide if the stock is down because of the overall market

• Search for more information on the company

• Decide if the stock is a buying opportunity

• Decide whether to sell or buy more

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What do I do in a Bear Market

• Decide whether this is a market correction or the start of something more

• Review the stocks you own

• Review stocks you wanted to own but were too expensive at time of research

• Check your portfolio for balance or the type of stocks you own

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Things you Don’t want to do in a Bear Market

• Do not panic sell

• Do not buy stocks just because they are cheap

• Do not buy because the media says it is a good time or a cheap price

• Do not sell stocks short unless you understand how to do it and what could happen

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Do’s in a Bear Market• Stay the course• Review why you bought the stocks in the first

place and decide if anything has changed• Dollar cost average your stocks• Review quality stocks that were over priced• Review your SSGs for buying signals • Remember that when stocks are on sale you

get more “bang for your buck”• Sell losers to offset capital gains and buy

them back in 31 days if it is still a buy

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Buy Low and Sell High

• Better Investing(NAIC) and Warren Buffet guidelines: buying good quality companies with good fundamentals at a fair or bargain price with more room for growth and price appreciation.

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Advantages of a Bear Market

• There are only 2 times when it matters what price a stock sells for

• 1. When you buy it

• 2. When you sell it

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Review

• Don’t panic sell• Don’t buy just because prices are low

or the media recommends you buy• Learn from your mistakes• Review your SSG’s and your portfolio• Remember that a bear market is a

buying opportunity• Don’t forget about your tax situation

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