What is a Bear Market & How or Where to Invest When It Comes?

how to invest in a bear market?

This post was written in collaboration with Futu Singapore (FUTU SG). While we are financially compensated by them, we nonetheless strive to maintain our editorial integrity and review products with the same objective lens. We are committed to providing the best information in order for you to make personal financial decisions with confidence. You can view our Editorial Guidelines here.


A bear market is the best time to jump in and pick up some stocks at a bargain…but how or where to invest? Despite a recent rally, you’re still in time to scout for undervalued stocks and buy more shares in your favourite companies when the market falls.

What is a bear market?

A bear market is an extended period over which prices decline. It’s like a giant share sale. Conversely, a bull market is a prolonged period seeing rising prices. Based on historical data, a bear market typically lasts for about 9 months to a year, while bull markets usually last for at least 2 to 3 years.

 

Possible adjustments to your investment portfolio in a bear market

Bear markets can give you a heart attack if you’re holding on to stocks you bought at a high price, but they can be a great opportunity if you know how to use them. That’s why it’s important to know how or where to invest. For one thing, a bear market can be a good time to start buying US stocks taking a dollar cost averaging approach, since the low(er) market prices can be a good starting point.

However, as market conditions are rather volatile at the moment, there is no way we can be sure that all the stocks we buy are at their lowest price point ever, even though that would be ideal.

It is thus important to do your due diligence and check the fundamentals of any stocks you’re thinking of buying. In other words, don’t anyhow buy stocks just because they look cheap and assume that since we’re in a bear market, the price will definitely rise.

 

Why invest in the US market?

If you’ve only ever bought stocks on SGX, you might be wondering why you should branch out and buy US stocks. Here’s a very good reason: diversification. SGX is great and all, but only offers you exposure to the Singapore economy.

What’s more, the US stock market is huge in terms of volume and has an unprecedented number of international companies and liquidity. So, if you want to diversify your portfolio according to industry or sector, you’ll find more than enough potential buys on the US markets.

The US might be on the other side of the world, but it’s super easy to buy their stocks because online brokers like moomoo SG have really lowered the barrier to entry.

moomoo (by FUTU) logo
MoneySmart Exclusive
Low commission fees
Min. Commission Fee US Stocks
US$0
Min. Commission Fee SG Stocks
S$0.99
Min. Funding
$0
MoneySmart Exclusive:

Deposit at least S$100 into a moomoo SG account and receive 5000 GrabRewards Points! Applicable to new users* only. T&Cs Apply. 
New users who deposit at least S$2,700 into their account will stand a chance to win a stock worth up to 1 Apple stock!

Valid until 30 Nov 2022

For example, trading US stocks through moomoo is very affordable due to their ultra competitive fees — they charge lifetime $0 commissions* on US stocks and ETFs. For those buying US stocks through dollar cost averaging, these low fees will let you enjoy even bigger marginal gains during the bull market run.

Trading through online brokers like moomoo SG is easier, more convenient and cheaper than using traditional brokers, which is what most people used in the past. Here’s a comparison between the two and how to best invest in US stocks.

*T&Cs apply.

 

How to best invest in US stocks?

1. DIY or via a rep

Online brokers enable you to execute trades via an app, meaning you can buy and sell stocks whether you’re at home on your computer or on the MRT using your smartphone.

Traditional brokers, on the other hand, require you to trade through a representative. Doing so offers more of a human touch, but can be a nightmare for those who hate having to deal with others.

DIY-ing your trades via a platform lets you trade at your own convenience. There’s no need to feel paiseh about waking up your broker to make a trade or worrying that he or she will be too busy to attend to you.

For those of us who hate picking up calls and prefer to do everything via text, trading online is a non-confrontational lifesaver.

With an online broker like moomoo SG, you receive Level 2 data and real-time quotes, and you can execute trades in a couple of microseconds. Being able to trade so speedily and conveniently lets you grow your money in a matter of minutes each day.

Also, funding your account can be done on the platform in a flash with direct debit and currency exchange. You can do this while waiting in line at your favourite hawker stall or taking the train to work, so it won’t eat into your precious time.

 

2. Fees

Moomoo SG’s commissions on US stocks and ETFs are as low as they can get — $0. Any lower than that and they’d have to give you money! Typical traditional brokers not only charge commissions but also a minimum fee per trade, so if you make smaller trades you end up having to pay more than the percentage commission fee.

Low fees are paramount when trading, because you don’t buy stocks in order to hug them to sleep…the only thing that matters is making money. The more you save on fees, the more you’ll be able to maximise your profits and realise gains from smaller movements.

On a single trade, the extra commission fees may not look like much, but it can really eat into your gains. Here’s a quick visualisation on how the commission fees can add up on 1 trade vs 10 trades vs 100 trades:

Quick tip: To gauge roughly how much you’ll be paying in fees, go to your Securities Account in the moomoo app, click “All” and scroll down till you find “Fee Calculator”. Other fees may apply.

Here’s a side-by-side of the calculator interface and the calculation results of the fees without commission and with commission:

 

3. Education

Traditional brokers don’t care if you know anything about the financial markets. They just want you to give them instructions and leave everything in their good hands. This makes it hard for newbies to start trading.

However, now with online brokers like moomoo SG, there’s quick access to information and even educational content.

Some of the educational resources moomoo offers include 24/7 news, articles and a community that lets you share tips with fellow traders. In other words, the moomoo platform not only gives you the tools to trade but educational materials that let you learn how to do so in the first place.

 

4. User interface

Typical traditional brokerages aren’t designed to be beginner friendly. They expect you to let the broker take care of your trades. Some traditional brokers now also have online platforms, but these are usually not designed to be user-friendly and can be intimidating for beginners.

Online brokers like moomoo SG, on the other hand, are designed to be easy to use. For instance, moomoo is mobile-first, with a very user-friendly app that enables you to monitor trades wherever you are.

Let’s face it, nobody wants to have to rush home or find somewhere private with a secure, encrypted WiFi connection in order to execute trades when US markets open at 9.30pm Singapore time. With mobile-first online apps like moomoo, you can monitor your trades wherever you are — on the MRT, hawker centre or shopping mall. You can even sneak in a quick trade (or trade together) while having dinner/drinks with friends.

Most importantly, a mobile-first platform like moomoo SG’s means you don’t have to be tethered to a certain schedule or lifestyle in order to trade — instead, the platform moulds itself to your lifestyle…and not the other way around!

 

5. Ease of opening an account

Traditional brokerages are quite troublesome to sign up for. Usually, you first need to sign up for a CDP account. Then you’ll have to provide documents (although this can be done online via Singpass now) and wait for the brokerage to approve your account. Yawn.

Opening an account with an online broker like moomoo SG is easy peasy! Just download the mobile app or head to their website and sign up in a few minutes by filling in an online form. What’s more, you can also take advantage of sign-up promos to get a head start with cash rewards.

Sign up for moomoo by 31 Oct 2022 to benefit from their ongoing promo.

For a limited time, get S$2* cashback daily up to a total of S$60 when you try out moomoo Cash Plus. As a new joiner of moomoo, you’ll get a welcome bundle including a free share worth up to S$150 and S$40 worth of cash and fund coupons when you fund your moomoo SG universal account with just S$2700 within the same month.

moomoo (by FUTU) logo
MoneySmart Exclusive
Low commission fees
Min. Commission Fee US Stocks
US$0
Min. Commission Fee SG Stocks
S$0.99
Min. Funding
$0
MoneySmart Exclusive:

Deposit at least S$100 into a moomoo SG account and receive 5000 GrabRewards Points! Applicable to new users* only. T&Cs Apply. 
New users who deposit at least S$2,700 into their account will stand a chance to win a stock worth up to 1 Apple stock!

Valid until 30 Nov 2022

Disclaimers:
T&Cs apply. All views expressed in the article are the independent opinions of MoneySmart Singapore. Neither moomoo Singapore or its affiliates shall be liable for the content of the information provided. This advertisement has not been reviewed by the Monetary Authority of Singapore.