Watch more How to Invest Your Money videos: http://www.howcast.com/videos/220908-How-to-Invest-in-a-Bear-Market

Don’t hide in a cave when the market is down. Find stocks that will pay off when the bull makes its return.

Step 1:
Don’t buy stocks on margin, which means buying them with borrowed money. This is always risky, but more so in a bear market, when stocks tend to decline due to a sluggish economy.

Step 2:
Buy currencies of mature economies, which may increase in value during a bear market because they often stay more stable during periods of decline.

Step 3:
Buy stocks now at limit price below market, which means placing an order to buy stocks if and when they fall to a certain price. These orders come with a time limit.

Step 4:
Sell any emerging-market stocks, which often do poorly when the world economy is suffering.

Tip
One rule of thumb is that the percent of your portfolio invested in bonds should match your age.

Step 5:
Buy small-cap stocks, also known as emerging-growth stocks, which tend to go up in a bear market because they are not owned by mutual funds.

Step 6:
Buy initial public offerings, known as IPOs. In a bear market, only the most financially sound companies have the luxury of going public.

Step 7:
Sell your mutual funds, which tend to drop in a bear market because everyone is selling the same stocks.

Step 8:
Play it safe with bonds and dividend-paying stocks, which usually offer steady returns.

Did You Know?
After the 1929 stock market crash, stocks did not return to their pre-Depression levels until 1954.
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