Should investors seek professional independent investment advice for a fee during a bear market or should they try to “save” money by not using an advisor and simply putting all their funds into an insured CD?
When an investor hears that an advisor is bearish the investor maybe tempted to think he can save money by simply parking his assets in an insured CD and thus avoid paying for investment advice. However, the investor risks missing advice about when is the right time to get back into the market. The investor may miss advice on contrarian strategies that may be feasible during a range bound bear market. An investor who shuns the advice of a bear market advisor may end up being fooled by a bubbly bullish demagogue who encourages buying stocks at the top of the market, which would result in losses.
Perhaps the most important rule in investing is to avoid losing money. This is because for example, if you lose 50% then you need to make 100% to get back to even. Also if you suffer big losses you may feel too frustrated to invest and then miss the rally that occurs after a crash. So for this reason it is more important to get professional advice from a bear market advisor than it is to get bullish advice during a boom time.