The fear of losing money is the biggest factor when it comes to investing decisions. The pain of losing money is greater than the happiness most people get from making money.
There are very few riverboat gamblers – people who are driven by the thrill of making big money and who are comfortable with the risk of losing it all.
Imaging how easy investing would be if there were no ugly bear markets. None of us would have to waste our time and energy worrying about the next big crash.
But bear markets will always exist if humans are driving the financial markets. We overreact to both good and bad news and that is reflected in the wild swings of the stock market.
The fear of the Bear market forces people into weak investments like bonds. Bonds generate measly returns and they can also lose money in the short term.
Investing strategies are totally driven by one’s feelings about severe bear markets. Investors separate into three different categories – conservative, aggressive or moderate. Hear is the breakdown of where people fall.
Investor Categories
| % of Population | % of Retirees |
Conservative | 30% | 35% |
Moderate | 50% | 55% |
Aggressive | 20% | 10% |
Conservative investors can’t handle any losses, so they end up investing in things like CDs. Aggressive investors are willing to tolerate bear markets and waiting for the inevitable rebound. Aggressive investors put almost all their money in stocks. Like most things in life, most people fall somewhere in the middle. Where do you fall on the investing spectrum?
But since memories are short, people don’t stay totally locked in with their investment strategy. Good times make people complacent and bad times make people hyper-vigilant.
Younger investors did not experience the losses in the Great Financial Crisis of 2008 while older investors like me painfully remember watching the stock market drop by more than 50% in a short period of time.
Your awareness of severe bear markets, your strategy to deal with bear markets, and how you react to bear markets is everything in investing. This affects how you invest but also, more importantly, your investing results.
We all feel like financial geniuses right now. The last 3 years (20% per year) have been tremendous for stock market investors. Again, investing is easy in bull markets. It is easy to get complacent at times like this.
There will be another severe bear market. We are overdue for one. Nobody knows when and nobody knows the cause, but it will happen.
Let me show you what it will look like for your investments when it happens. Most of you (moderate investors) will experience something like the blue line in the graph below. A smaller percentage (aggressive investors) will experience something like the red line below.
Each investor (moderate and aggressive) enters the bear market with $1 million in their retirement savings account. This is a simulation of what will happen in a severe bear market (market decline of 45%). The graph tracks the value of each $1 million portfolio over time after the onset of the bear market.
Most moderate investors are not fully aware of what will happen to their life savings in a severe bear market. They think they are more protected than they really are. Their advisor convinced them to own bonds because it would insulate their portfolio against losses. But the moderate investor will see their life savings drop by over $300,000 and will have to wait 3.5 years for their account to get back to even.
The aggressive investor is aware of the risk, and they don’t need the money. They are okay with waiting 4.5 years for their account to recover.
A BETTER OPTION
My Growth & Safety system is “All About the Bear”. It is designed to avoid the financial and emotional pain of severe bear markets in stocks.
When the risk of loss elevates, the system flees to safety. Because the stock market is irrational in the short term, it isn’t possible to do this perfectly. The Growth & Safety system does experience some losses in bear markets, but the losses are much less severe.
In this graph, I have added how my Growth & Safety system should perform in an ugly bear market.
You can see that the Growth & Safety strategy does not lose as much money at the lowest point – only -12% at the bottom vs. -45% for the aggressive investor and -30% for the moderate investor.
The Growth & Safety investor recovers all losses within 1.5 years compared to the aggressive investor at 4.5 years and the moderate investor at 3.5 years.
Investment Strategy Comparison
Strategy Return % Loss % Recovery Time
Conservative 3.0% 0% 0 years
Moderate 6.5% -25% 3.5 years
Aggressive 9.0% -36% 4.5 years
Growth & Safety 12.0% -12% 1.5 years
The only investor that makes out better in bear markets is the conservative investor who doesn’t lose any money. But the conservative investor will only make 3% per year in strong growth markets (bull markets). That has been the traditional tradeoff – safety but at a cost of low growth.
You don’t have to sacrifice Safety for Growth.
My Growth & Safety system provides a high level of safety with losses of only 12% in severe markets, but it also provides high growth during bull markets.
We try to keep pace with the stock market in good times – achieving close to the 17% gains of the S&P 500 in bull markets.
That is how we beat the S&P 500 over time – staying close to its performance in growth cycles and losing less in bear markets. It is just math.
YOU DON’T NEED AN ADVISOR - YOU NEED A COACH
I have simplified the results for the aggressive and moderate investors. There are more varieties of investing strategies than just the two that I have included. Your situation might be different.
I am offering a free investing coaching session where I will stress test your investments to show you how they will perform in the next bear market. Your portfolio was probably not built to withstand an ugly bear market. The time to understand this is now, not after the bear market begins.
In this coaching session, I will also answer all your investing questions and help you build a better financial plan for retirement.
Paying an advisor $10,000 per year to build you an aggressive or a moderate investing strategy doesn’t make financial sense. You can build your own portfolio and get similar or better results without paying the 1% fee.
Most people need coaching from an expert to do this. Investment coaching is also better than reading ten books on investing and getting even more confused. Reading books and attempting to do this on your take a long time. You can read the books quickly, but you only learn the key lessons through experience.
Take advantage of this free coaching offer now by booking an appointment on my calendar via the link below.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
Just one month ago we were dealing with a declining stock market due to the fallout from the war in the Middle East. The stock market was down about 6%.
On April 1st, the market reversed that trend and has since climbed 13%. All the major market indices have risen to new all-time highs.
At the beginning of April, Wall Street began to look past the situation in the Middle East.
Even though the Strait of Hormuz is still closed, the market is expecting it to open very soon. Oil prices remain high, but the expectation is that they will fall rapidly once the Strait is reopened.
When we look at the wider trend since last October, we were stuck in a flat cycle until early March. It then looked like the trend broke in a downward move – only to be reversed by the latest move higher in April.
I expect continued volatility until ships can traverse the Strait freely. Wall Street does not care about the war, only the movement of oil and other products through the Strait.
Bullishness about corporate earnings is the big driver behind the recent market increases. Corporate earnings saw above average increases last year and the market is expecting even higher profit growth in 2026.
Tech stocks have led the recent stock market rally. Semiconductor stocks increased by 30% over the last month even with yesterday’s pullback.
Important inflation readings will be released soon. The focus will be on core inflation excluding energy prices. The Fed is expected to hold steady on interest rates this week.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
Updated: Apr 22
I often discuss Bull markets and Bear markets but there is another type of important stock market cycle to consider – the Neutral or Flat stock market.
The Neutral or Flat market goes nowhere. It stays stuck in a small trading range for a period of months. Based on my cycle definitions, this type of market must last at least five months to meet my criteria for a Flat market.
In most of my writings, I only talk about Growth or Bear Decline market cycles. I simplify the market this way to make particular points about the stock market. I actually track four market cycles for my Growth & Safety investment system – the Bear Decline, the Flat market, the Steady Growth cycle and the Volatile Growth cycle. My investment rules change depending upon which market cycle we are in at a given time.
Today, I want to discuss some key points about the Flat market cycle because we have just experienced one. This recent Flat cycle began on October 20, 2025, and ended on March 19, 2026. During this period pictured below, the S&P 500 went nowhere and stayed within plus or minus 4% of its average price over the five-month period. The cycle ended in late March when the market dropped further due to the war in Iran.
DISCIPLINE AND PATIENCE
The first point I would like to make about the Flat market cycle is the need to stay disciplined. A common mistake made by both amateur and professional investors is to “chase” higher returns when markets are stuck. People get impatient and take on more risk to boost returns. This approach rarely works and when it does work, it is due to luck and not skill.
Flat markets tend be relatively short cycles and nobody knows when they will begin or when they will end. Flat cycles tend to be followed by volatility. Flat markets can turn into bull markets or bear markets, and it can happen rather quickly.
Remaining patient during Flat cycles is the best strategy. You must accept that it is not possible to win every battle in the stock market. You won’t lose money in Flat cycles if you are patient. You just need to be ready to position yourself for the cycle that follows the Neutral cycle.
Remembering that the stock market grows at 10% per year in the long run allows you to stay patient during Flat markets. If you chase higher yields in Flat markets by investing in fixed income assets, you will likely miss the next bull market right around the corner.
THE PATTERN
Flat cycles usually follow bull market growth cycles.
The recent Neutral market of 2025/2026 followed the amazing bull market of 2023 through the end of 2025. Aggressive investors and my Growth & Safety clients saw their investments climb more than 70% over those three years in what was one of the best three-year cycles in market history.
It is typical for markets to pause after this kind of growth. It happened in 2004 after the bull market of 2002 and 2003. It also happened in 2011 after the bull run of 2009 and 2010.
Unfortunately, there is not a consistent pattern that occurs after Flat markets. In some cases, the market declines for a period after being flat and sometimes the market begins a bull cycle.
WHO WINS IN EACH CYCLE
Investing in the stock market is the best choice because the market is in growth mode most of the time (74%). The Bear Decline only represents 14% of market cycles and the Flat market only constitutes 12% of market time. Let’s look at who wins and who loses in each cycle.
Aggressive investors are people who put close to 100% of their money in the stock market. Conservative investors are people who primarily invest in fixed income assets. Balanced investors are people who put some money in stocks (50% to 70%) and some money in bonds (30% to 50%).
Cycle Type | Winners | Losers | Neither |
Growth Cycle (74% of time) | Aggressive | Conservative |
|
| Growth & Safety | Balanced |
|
Bear Decline (14%) | Growth & Safety | Aggressive |
|
| Conservative | Balanced |
|
Flat Cycle (12%) | Conservative |
| Aggressive |
| Balanced |
| Growth & Safety |
My fund, Growth & Safety, generates flat results in flat markets. My fund has been flat since last October as it should have been.
Aggressive stock market investors experience the same thing. They stay stuck during Flat markets. They win big in Growth cycles and lose big in Bear Declines.
Conservative investors see small gains in flat markets because they earn some interest while stocks are stuck in neutral. Conservative investors win during Bear Declines because they gain around 3% while stocks drop 36% on average. Conservative investors lose big during Growth markets, however, because they only earn 3% while stocks are gaining almost 20% per year.
Balanced investors (Target Date funds) post slight gains during Neutral markets due to interest earned on their fixed income assets. Balanced portfolios lose big in Bear Declines (not as much as Aggressive investors) and also lose in Growth markets because they only achieve half the growth of the stock market.
In the table above, you can see why my Growth & Safety fund waits patiently during Flat markets. We tolerate the lack of gains while we wait to win big in both the subsequent Growth cycle and the next Bear Decline.
The Flat market is the only cycle where my Growth & Safety fund doesn’t win. We don’t lose money, but we stay stuck in neutral while we wait for the next cycle change. We sit on the recent large gains, and we wait to pounce on the next opportunity – up or down.
If you would like to learn more about investing in my Growth & Safety fund and want to position your portfolio to win in the next Bull or Bear market, click below to book an appointment. You will get a free investment coaching session as part of the discussion. You don’t need an Advisor; you need a Coach.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
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