Bear stock markets cause panic for uneducated investors. In July 2002, the S&P 500 Index went down 19% in two weeks, as shown in the chart above, from the red dot to the red dot.
Investors who panic think they should flee to safe investments, and wait for things to get better. What they end up doing is selling at market lows, and waiting until the market goes back up, then buying back in at higher prices. It makes no sense.
Emotional decisions are rarely rational. Study stock market history so you react appropriately to market ups and downs.
The investors in 2002 who didn't understand that you must stay invested to achieve attractive stock market returns missed out on all, or a part, of the subsequent market recovery, as you'll see in the next two graphs.
