Bull Rider or Bear Fighter

by John Brummitt

While browsing Yahoo! Financial a while back, I came across an interesting title: “Bull Rider or Bear Fighter.” It caught my attention so I checked it out. It turned out to be a game—fantasy stocks, much like fantasy baseball or football. But it was enough to get me wondering whether I was a bull rider or a bear fighter when it comes to the stock market.

First, let me explain a bull market and bear market so this article makes sense to everyone. A bull market usually refers to the stock market, although it can be used for anything traded like currency, bonds, and commodities. Bull markets are characterized by optimism, investor confidence, and expectations that strong results will continue. You might fondly recall a bull market as, “the good old days.”

In contrast, during a bear market the prices of securities fall and widespread pessimism causes negative sentiment to be self-sustaining. Investors anticipate losses in a bear market, selling continues, and pessimism grows. You might recognize this as what you hear on the news every day.

The use of the bull and bear need some clarification as well. The terms have to do with how these animals attack their opponents. Bulls charge forward and thrust their horns upward, while bears swipe down with their paws pulling their opponent back. And you thought finance was boring.

So back to my thought, are you a bull rider or a bear fighter? The answer? You should be both at some point in your life. When we are young, most of us are bull riders. We know there is a risk of being thrown off, even trampled under the bull, but we are looking for growth in our investments. As we get older, we become less and less willing to “climb on the bull” and ride. Then we become bear fighters, not because we are in a downturned market, although that could be the case, but because we are more pessimistic about the state of a given market.

The thought of being a bear fighter is odd because fighting a bear toe to toe is a losing battle. Most of us are smart enough to simply back away slowly, switching investment allocations from an aggressive strategy to a more conservative strategy, protecting yourself from the downward swipes of the bear’s paws.

The Board of Retirement launched two new investment options in April, Pro-Mix Moderate and Pro-Mix Maximum, giving you a total of four options ranging from bear protection to bull rider extreme. Knowing how much risk and safety you can handle in your investments is the first step in deciding what your investment strategy should be. Before making any decision about your investments, research as much as you can about historical returns and trends in the market. Talk with your family to determine your tolerance level for loss. Don’t just focus on the reward of riding the large returns of aggressive investments.

Whether you are a bull rider or a bear fighter, remember that both come with their own set of risks. You cannot safeguard yourself against all of them. If you step in to the arena with a bull or a bear, the chance of a little pain and suffering is pretty high, and the longer you stay in the ring, the more likely you are to suffer a setback or two. But the prize for sticking it out is worth the risk if your goal is to accumulate assets.

About the Writer: John Brummitt graduated in 2011 with an MBA/Finance from Tennessee Tech University. A 2004 graduate of Welch College, he has been with the Board of Retirement since the spring of 2006.