As Ukraine-Russia war tensions drag along and equity markets oscillate in bearish territories, rapid economic recovery seems unlikely in the near future. The growth factor deteriorates further with aggressive interest rate spikes and stricter fiscal policies.

Capital markets are getting weaker due to such macro uncertainties. Investors are beginning to feel the heat of a possible recession. The fear is justified. But even if there is a recession this year, it’ll be much different from the financial crisis of 2008. Because today inflation rates are at all-time highs globally, while consumer behavior has changed completely in the past fourteen years.

However, it is for these very reasons that some believe the worst is yet to come. Though panic is not desirable, we must, nevertheless, be prepared. We must realize that high-risk-high-return assets like growth stocks, or even cryptocurrencies, will be worst-hit if the markets nosedive.

The point is not to shrivel, though, but rather to make investment-related decisions wisely. Effective strategies are what one needs to endure bear markets. Investors must strike a balance between defense and grasping the right opportunities.

But the more difficult question is—HOW? Let’s discuss five effective strategies.

1. Focusing on the Bigger Picture

When portfolios take a big hit and profits turn into losses, it’s challenging for any investor to remain unaffected. So, the first thing to do during a market downturn is to go back to the basics.

Investors should ask themselves whether their investment thesis is invalid or they are simply being prisoners of the moment and letting emotions take over. By looking at historical data, for example, they can easily see there’s nothing to worry about 20-30% sell-offs.

Moreover, powerful expansion has followed almost every market contraction over the years. Those who stayed invested through downtrends usually reaped the maximum rewards. So, investors need to remember that market declines are temporary. And eventually, they are bound to make a strong comeback—there’s no other way.

Choosing financial instruments with long lock-in periods is an effective way to filter market noises and focus on the bigger picture. On the contrary, easy access to withdrawals makes investors more susceptible to mistimed sell-offs and panic. The gain, after all, always comes in the long term.

2. Tracing Market Correlations

In general, investors must have multiple asset classes in their portfolios to minimize risks and maximize exposure to high-yielding sectors. But when the correlation between different assets is high, downside volatility nullifies the benefits of a diversified portfolio.

According to Arcane Research, the crypto and equity markets have performed on a near-perfect positive correlation since early-2022, with asset prices moving in sync. Thus, investors exposed to both asset classes carry more downside risk. However, this wasn’t the case when the COVID-19 pandemic caused a collapse in capital markets during the 2019-2021 period.

Investors adopted bitcoin as a robust hedge, a safe haven , against harsh market conditions. But rising institutional and retail adoption has made the risks of spillovers across financial markets more prominent.

Over time, cryptocurrencies like bitcoin will decouple from growth stocks and provide a hedge against inflation. Until then, investors should wisely consider market correlations while managing their portfolios.

3. Grabbing the Right Opportunities

Those who remain optimistic in bear markets acquire generational wealth. The positive outlook allows investors to seek the next market opportunity, even by exploring uncharted terrains. Particularly in the blockchain and crypto industry, it’s much easier to find high-quality businesses when bear markets shake out the bad players.

Besides early-stage investing, one can also hunt for dividend-paying companies. In most cases, a bear market doesn’t affect the earnings of established business models significantly. But the stock prices do, indeed, go down, offering foresighted investors the opportunity to access steady dividends and cash flows at a discounted price.

4. Leveraging Tax Loss Harvesting

Investors must realize that every company or crypto-based project won’t survive a difficult phase in capital markets. Nor will all of them come back strongly, even if they survive somehow. So, although optimism is good, it must not lead to foolishness. It’s usually better to give up on hopeless projects, realize losses on their assets, and reduce tax liabilities.

Moreover, one can utilize current capital losses for future investments. For example, suppose someone loses $10,000. From this, they can use $2000 to lower gross income and current liabilities. And the remaining $8000 can help them offset long-term capital gains for several years. This strategy is called tax-loss harvesting . Besides rebalancing portfolios, it’s an effective way to put more weightage on large-cap or blue-chip assets.

5. Playing Defense with Gold

Markets undergo tremendous liquidity crunches during crisis periods. Investors thus tend to move away from high-risk, low-liquidity assets to low-risk, high-liquidity assets. Gold is one such asset, featuring almost at the bottom of the risk curve.

However, legacy methods of investing in gold have severe limitations. For one, they are highly centralized and intermediated, which increases the risk of manipulation, as well as the costs. Thus, the most effective and secure way of investing in gold is through innovative gold-backed crypto-assets.

Asia Broadband, Inc. (OTC:AABB) offers one such token, namely $AABBG. It’s a hybrid token with 100% physical gold backing and a proven track record. Having served Asian markets for over thirty years, Asia Broadband allocated gold worth $30 million to issue roughly 5.4 million AABB Gold tokens (AABBG) in March 2021. Each token’s value equals 0.1 gram of gold while letting investors redeem physical gold.

The platform’s integrated exchange features over four hundred cryptocurrencies and sixty trading pairs, with zero deposit fees. It also has a native payment service, PayAABB, that allows businesses to access seamless crypto-based transactions. Such a platform built on top of an asset like gold can serve well during bear markets, without requiring too much hands-on action from investors.

Conclusion – This Too Shall Pass

Imagine someone buying a house for $50,000 and selling it the next day for $40,000. Why? Because the housing market shrunk by a few percentage points. Selling off crypto holdings in haste during bear markets is equally absurd.

Investors must be patient during downturns, holding on to their convictions about fundamentally strong assets. It’s crucial to remember that this too shall pass. And if the bear has arrived, the bull can’t be far away