Poking the Bear: What to Invest in During a Bear Market

Epoch Times

27-05-2025

Market swings are part of an investor's life. But what happens when the stock market takes a nosedive? What do you do when we fall into bear market territory? This is when a major stock market index like the S&P 500 suffers a decline of 20 percent or more from a previous high.
But don't panic. Bear markets could open the door to some investing opportunities and more ways to diversify your portfolio.
So here are some tips on where to stash your money during a bear market.
Defensive Stocks
Defensive stocks are shares of companies that provide essential goods and services that are in demand regardless of where we are in the market cycle. Many of these companies are known to remain resilient and even thrive under bear markets. Here are some examples of defensive sectors.
Consumer Staples
These are companies that provide food and common household products.
Here are some of the top consumer staple stocks:
Procter & Gamble Co. (PG)
Coca-Cola Co (KO)
PepsiCo Inc (PEP)
Walmart Inc. (WMT)
Costco Wholesale Corp (COST)
Health Care
This sector includes companies providing pharmaceuticals and medical supplies and equipment, as well as hospitals and long-term care facilities. It also includes biotechnology.
Here are some of the top healthcare stocks:
Johnson & Johnson (JNJ)
Eli Lilly and Company (LLY)
Pfizer Inc. (PFE)
UnitedHealth Group (UNH)
Abbott Laboratories (ABT)
Utilities
These companies provide electricity, power, and gas to communities across the country.
Here are some of the top utilities stocks:
NextEra Energy Inc (NEE)
The Southern Company (SO)
Dominion Energy Inc. (D)
Duke Energy Corp. (DUK)
Constellation Energy Corporation (CEG)
Dividend-Paying Stocks
Some companies pay portions of their earnings to shareholders on a regular basis in the form of dividends. So even in a bear market, these companies could provide a steady stream of income.
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Dividends are typically paid on a quarterly basis. The amount is determined by the firm's board of directors and based on the company's recent profits. You would want to look for companies with a history of strong earnings.
Here are some notable dividend-paying stocks:
ExxonMobil (XOM)
Johnson & Johnson (JNJ)
Alphabet (GOOG)
NextEra Energy (NEE)
PepsiCo PEP
ConocoPhillips COP
Bonds
Bonds are essentially loans that you extend to corporations and governments. Bond prices often move in the opposite direction from stock prices. You may want to seek out investment-grade, short-term bonds to diversify your portfolio.
You could also consider Treasury securities. These are debt investments issued by the U.S. government, and they are backed by the full faith of Uncle Sam—making them some of the safest investments around. Here are some examples.
Treasury bonds
: T-bonds are long-term bonds that pay a fixed interest or coupon payment every six months. They mature in 20 years or 30 years.
Treasury notes
: T-notes pay interest payments every six months. You can purchase T-notes in two-, three-, five-, seven-, and 10-year terms.
Treasury bills
: You buy T-bills at a discount to their face value. When the bond matures, you get the note's face value. The difference is essentially your interest payment. You can buy Treasury bills with maturities of four, eight, 13, 17, 26, and 52 weeks.
Don't Panic
Seeing your portfolio plummet during a bear market could tempt you to sell all your stocks. But that means you'd lock in losses and miss out on gains when the market recovers. And it will. Bear markets don't last forever. The typical bear market lasts an average of 9.6 months, according to an analysis by
Rebalance Your Portfolio
A bear market may be a good time to revisit and rebalance your portfolio. Your stocks may have taken a nosedive while your bonds could have seen significant gains. This would throw your asset allocation off balance and open you to risk. So you may want to sell some stocks and buy more bonds to shift the portfolio back in balance.
The Bottom Line
Bear markets are scary things. It can be depressing to see your portfolio take a plunge. But don't panic sell and lock in losses before the next bull market. Remember, bear markets are temporary. And you can also find investment opportunities in bear markets. You can look into defensive sector stocks, dividend-paying stocks, and bonds to get started. But overall, it's important to maintain a well-diversified portfolio aligned with your goals in any part of the market cycle.
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The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.