The term "bear market" is derived from the downward, painful, and vicious decline reminiscent of the swipe made by an attacking bear. In contrast a ‘’bull market’’ depicts how a bull thrusts its horns up into the air and generally refers to a period of time when prices go up. Some causes of a bear market, aside from those mentioned earlier may include, a high inflation rates (double-digit) and declining economic activity as a result of unfavourable monetary policies (relatively high interest rates).

Generally, a bear market will cause the securities you already own to drop in price, perhaps by a substantial degree. The decline in their value may be sudden, or it could deteriorate slowly over time, but the end result is the same: The value of your portfolio holdings drops. Investors are highly susceptible to losing money during a bear market especially when they stop investing altogether — either out of fear, confusion, or because they just don’t know what to do.

To counter a bearish market, there are some strategies that can be adopted by investors to safe guard their stock portfolio.  To better understand these strategies, it is key to first understand the different classifications of equity and how these various types of equity can be deployed and harnessed effectively during a market slump. According to Quora.com, there are four classes of stock namely:

1. Growth Stocks:  These are the shares purchased for capital growth (Increase in share price), rather than dividends. Growth stocks are essentially shares in those companies that are making profits and whose earnings are expected to grow at an above-average rate relative to the market.
2. Dividend aka yield stocks: They are the stocks of choice for the income-seeking investor. These typically perform well in a bull market and may provide some level of buffer during a bearish market.
3. New Issues: Also known as Initial Public Offerings or IPOs. These events mark the first time that companies make their shares available to the public.
4. Defensive Stock: Also known as non-cyclical stocks because the performance of these companies have very little relationship with economic cycles e.g. fast moving consumables and oil. As such these shares do not go down so much when times are tough. To be Continued……