What You Should Do During Recession & Bear Markets!

A step-by-step survival guide for long-term wealth builders

You’ve probably heard it lately—“Recession.” “Bear market.”

Yeah, me too.

My entire feed—X, Facebook, LinkedIn, news, TV—
All red candlesticks.
All panic.
Screaming headlines. Shouting presenters. “Hot takes” everywhere.

Everyone has an opinion.
What to buy. What to sell. What to fear.
It’s loud.

And if you're feeling lost? I don’t blame you.
I felt the same when I started investing.

The noise distracted me.
I lost focus.
I forgot why I was investing in the first place.

Now, I want to help you avoid the same trap.
Skip the steep learning curve.
Stay focused. Stay calm.

I’m going to save you time—lots of it.

Here are 10 simple steps to help you rise above the noise—And stay ahead of the average investor.

Let’s dive in.

---

1. Stay Calm. Stay Invested.

Source: Morningstar

The chart speaks for itself, right?

Ever since we’ve been able to invest in the stock market, there’s been heaps of instances where the market tanked by 5%, 10%, 15%, 20%, and even 25%+.

We’ve endured the Great Depression and wars!

What happened after all these catastrophic events? The market continued to function as if nothing had happened.

Even not too long ago, look at this.

Source: Morningstar

We’ve endured the ‘‘Lost Decade’’ from January 2000 through December 2009.

Later, we got COVID-19. The stock market tanked! A year later, it started doing the usual thing again, going up.

Then, we had the Ukraine war, inflation, and shortages. Five months later, the stock market adjusted and resumed its normal behavior.

We had ‘‘Liberation Day’’ (the only thing that got liberated are my portfolio gains…) when Donald Trump announced (reciprocal) tariffs on 185 countries. The market didn’t expect this type of tariff scale, and it started tanking again.

Source: Bloomberg

It’s important to stay invested, even if you do nothing. You could DCA into positions, but…

Just stay invested. You’ll be fine!

Since 1950, the S&P 500 has gone through 11 bear markets. All were eventually followed by bull markets.
The average loss in a bear: -33%.
The average gain in the following bull: +166%.
(Source: First Trust Advisors, 2023)

If you panic-sell during a crash, you lock in losses and likely miss the rebound.
If you stay invested, you ride the recovery—and recover faster.

2. Audit Your Portfolio: Cut the Fat

Bear markets are like a financial detox—they reveal which investments are sturdy and which are fluff.

Take the time to:

• Review every position in your portfolio.

• Trim or exit stocks you bought on hype, not conviction.

• Ask: “Would I buy this business today, at this price?”

Look at what happened in 2022—unprofitable tech and meme stocks collapsed. But businesses with strong cash flow and pricing power held up far better.

Now is the time to upgrade your portfolio, not cling to old mistakes.

I’ve been switching my positions for higher-conviction positions, upgrading my portfolio, and ensuring that in the future, I am sitting on high-quality stocks that will both protect his wealth and grow it at modest rates, at least beating inflation and hopefully the overall indexes.

Example: During the 2022 bear market, many companies with no free cash flow and unscalable models dropped 70%+. The pain was avoidable.

Bear markets are a chance to upgrade your portfolio—from hope to quality.

3. Research Like a Maniac

During a bull market, it’s hard to focus. Prices are going up, dopamine is flowing, and FOMO is real.

But bear markets slow things down. That’s a gift.

Use it to:

• Deep dive into quality businesses.

• Read annual reports, earnings calls, and investor letters.

• Build watchlists of companies with durable advantages and strong balance sheets.

"Bear markets make great companies look average. But they make average companies collapse."

Ask yourself:

• Is revenue still growing?

• Are margins holding up?

• Does this business have pricing power, cash flow, and a competitive moat?

This is the homework that sets up the next decade of returns.

Build up conviction in your positions or strategically look for opportunities into companies you have more trust in.

During these markets, everyone screams ‘‘do not sell!’’. But switching from a high-quality company to a higher-quality one is a good reason to sell and get into another company.

4. Dollar-Cost Average (DCA) In

Source: Trading212

Trying to call the bottom is a loser’s game.

Instead, set up a system where you automatically invest the same amount every week or month—no matter what the market’s doing.

This is called Dollar-Cost Averaging (DCA).

Example:
If you invest €500/month and a stock falls 30%, your next buy gets you more shares. When the stock recovers, your average cost basis is lower—and your return is higher.

Over time, DCA reduces volatility and builds discipline.

5. Maintain Dry Powder

Having 5–20% in cash gives you optionality when others are frozen.

But it’s not for timing—it’s for exploiting opportunity.
The key is to have a buy list ready.

Tip: Label companies as:

• Tier 1: High-conviction, buy if it drops 20%.

• Tier 2: Quality, wait for 30% drop.

• Tier 3: Speculative, only buy with momentum + macro tailwind.

💡 Buffett’s playbook: “Be fearful when others are greedy, and greedy when others are fearful.”

6. Zoom Out: Think in Decades

Bear markets make you obsess over daily moves. That’s a trap.

Instead, shift your focus:

• What will matter in 5 years?

• Which businesses will still dominate in 10 years?

• What secular trends are unshaken by a recession?

Case in point:
During COVID-19’s 2020 crash, stocks like Microsoft, Apple, and Nvidia fell sharply.
Three years later? All hit new all-time highs—because their business fundamentals never broke.

7. Master the Mental Game

Bear markets test your psychology more than your spreadsheets.

• Re-read investor classics (The Psychology of Money, Howard Marks memos, Berkshire letters).

• Study how past downturns played out—2000, 2008, 2020.

• Reflect on your own reactions and biases.

Think of a recession as a mental gym for investors.
You're becoming a better investor every time you stay calm, hold quality, and keep buying.

8. Revisit Your Investment Thesis

Now’s the time to double-check: Why did I buy this company?

The best businesses are anti-fragile—they get stronger in tough environments.

Ask:

• Has the company’s competitive advantage weakened?

• Are they losing market share?

• Is their profitability declining structurally, not temporarily?

If the thesis is still intact or stronger (e.g., gaining market share while others shrink), it might be time to add more.

9. Rebalance Strategically

Volatility distorts your portfolio allocation.

Example:
If tech falls 40% and your bonds hold steady, your allocation to tech shrinks—even if you didn’t sell.

Rebalancing:

• Bring your portfolio back to target weightings.

• It forces you to buy low, and sell high (mechanically).

• Encourages discipline.

Research from Vanguard shows that annual rebalancing improves risk-adjusted returns while preventing overexposure to any one asset class.

10. Stay Opportunistic, Not Passive

Being long-term doesn’t mean being lazy.

Bear markets present rare chances:

• Insider buying spikes (watch for it).

• High-quality stocks dip below intrinsic value.

• Dividend yields on blue chips jump (think 4–6% from Coca-Cola, Johnson & Johnson, etc.)

Track:

• Free cash flow yields

• EV/EBIT ratios on quality names

• Balance sheet strength

• Industry consolidations (buy the winners)

These are the moments where great portfolios are built. Not when it’s easy, but when it’s scary.

Final Thoughts

Bear markets feel like the end of the world. But they are normal, temporary, and—if handled right—one of the best times to build wealth.

Stay disciplined. Stay curious. Stay invested.

That’s It For Today!

PS…. if you’re enjoying FluentInQuality, can you take 3 seconds and refer this edition to a friend? It goes a long way in helping me grow the newsletter (and bring more quality investors into the world). Whenever you get a friend to sign up using the link below, you will be one step closer to some fantastic rewards.

Lastly, I would love to hear your input on how I can make FluentInQuality even more helpful for you! So, please leave a comment with:

• Ideas you’d like covered in future posts.

• Your takeaways from this post.

I read and respond to every comment! :-)

And remember…

Great investments don’t shout—they compound quietly.

- Yorrin (FluentInQuality)

Used Sources

• Finchat is used for all the charts. Your subscription is now 15% cheaper using my link. Click here to start today!

Disclaimer

By accessing, reading, or subscribing to my content—whether on Substack, social media, or elsewhere—you acknowledge and agree to my disclaimer. Read the full disclaimer here.