How To Profit From A Bear Market

With IHSG going down and commodities so high, it might be that we are in the face of a recession. I hope that it won’t happen. But if it happens anyway, we can get out from the stock market (cash-out), or still profit from the fall. If you still want to play, you need a new rule. If we usually bet up, why don’t we bet down now. It may require a very different mindset and it is very difficult, but it is still possible. Although, some will warn you that these strategies is to be treated very carefully, as it is very dangerous and risky game to play with. But, if the bull is climbing, the bear is thrown out of the window. So, the profit can be even greater than a bull market (theoretically). Basically, in a bear market, we can do three things:

1. Short Selling speculative and growth stocks – buy stock you don’t own (borrow) at market price and return it later at lower price. (maybe you need to negotiate this to your broker first)

2. Buy put option (I wonder where I can find one here in Indonesia)

3. Trade range, not trend. This is like usual trade, but look for lower profit in ranges and trade more often.

Several articles can be found in these places:

1. How to Earn in the Falling Stock Market

2. Short Selling Stocks – When Bad for the Market is Good for you

3. Bear Market Trading Strategies – Brief Article

4. How to Trade Profitably in a Bear Market

5. Bear Market Etiquette

But remember, if you manage to get any profit from the fall, you need to donate a big chunk of it, since you’re profiting from the other investors’ loss. Still, this is a possible game to play if you really want to play.