Can you survive the next bear market?

The world is falling apart and feels like ending. Have you ever experienced this kind of feeling in your investment life? I have and twice: one during the dot.com bubble burst back in early 2000 and the other during the housing bubble burst in 2008/09. Regardless how strong your nerve is, it is no fun to go through this if you have significant assets in the market. I have all the major assets in hands with significant money: stocks, precious metals, real estate properties, and cryptos. What is common among them? Yes, all risk assets that could be hugely impacted by the market one way or the other (less so for real estate properties I know but think about the 2008/09 crash). Since I was still making good money from my active income and increasing during the past 2 crashes, I was in a much stronger position to sit them through, although extremely painful when seeing the values of my assets keep going down. I definitely don’t want to go through this again but are we totally immune to this kind of end of the world type of crisis during our life? You should know my answer! Yes, I seriously doubt about the immunity and actually think it is very likely the next crisis that could be even bigger than the dot.com and housing crisis may hit us in the foreseeable future. Actually if you seriously study the stock market history, the two crises I mentioned above should even not be considered as bear markets but just part of bumps within the huge ongoing bull market. In the past 100 years, we have only experienced 2 real bear markets each lasting for 15 years or longer. The first one was the most famous Great Depression, which caused the stock market into depression as well for 20 years from 1929 to 1949. Then the next long lasting bear market started in 1966 till 1982 for 16 years. Although the dot.com crash and housing crisis made all of us want to vomit for stocks, each only lasted for less than 2 years and neither of them caused the market to decline below its bottom seen in 1982 (Dow below 1000). So in reality, we are still in a long lastingbull market starting from 1982 till now, about 36 years already. So naturally we all have to ask what will happen and how long it will last when the next real bear market hits us. It will be naïve to just believe we will only continue with the current bull market without experiencing a painful bear market anymore. To me it is not if but just when.  Don’t call me a pessimist as I’m not.  Otherwise I’d not have so much money in all the risk assets since I’m still thinking a bright future is lying ahead us. The big dilemma is that before we see a truly bright future, we may first see an unprecedented thunderstorm in a scale much bigger than what we have seen before. I guess you don’t need me to go through the reasons why I’m so worried about this since I have talked about them from time to time but more systematically outlined in this previous blog.

For younger people 40 or younger, this may not be so devastating as long as you have sufficient active income generated during the period and you still have time to rebuild up your wealth. For people in my age or older who are entering the retirement phase and the active income will become less and less either by choice (i.e. reduce working even if not necessarily) or  involuntarily (due to health reasons or physically too old to work), the last thing you want to see is the significant dropdown of your asset value that may take years to come back, even if it can recover. What can you do if this truly happens to you during your inactive years when you are heavily relying on the passive income from your assets but they cannot meet your demand? The more I think about it, the more worry I have, given my strong believe that a huge financial crisis will hit us within the next 10-20 years. Don’t forget there is no free lunch after trillion dollars of phony money has been created in the system in the past 10 years. It is not if but when the reckoning day will come and hit us very hard at the extent more than anyone can imagine at the moment! Just put yourself back into 2006/2007 years: did you feel a crisis almost bringing down the whole world financial system was coming? I bet you didn’t by far! That’s why I have been thinking about exploring a strategy for several years that will allow me to still stand firmly even if the end of world type of financial crisis hits us. I want my family in such a situation that we can lose everything held in the risk assets but can still survive and maintain our life style in the rest of our life. Thanks to my connections who were experts in this area and introduced me to the strategy as well as myself extensive research and studies, I’m happy to say that I have found such a great strategy that meets all my needs and can safely secure my future regardless what may happen in the stock or real estate market. I have already started to implement this plan, which I call it my "market risk free retirement plan”. It is too long for this blog and I will share more details next week. Stay tuned!