Skip to content

Episode 81: Down 20%? What Smart Investors Do in a Bear Market

The market’s down, the headlines are loud, and your portfolio might be off by double digits. If you’re wondering what to do during a bear market—you’re not alone.

In Episode 81 of the Last Paycheck podcast, CERTIFIED FINANCIAL PLANNER® Archie Hoxton and advisor Jimmy Sutch explore what bear markets really mean—and how savvy investors respond when the market dips 20% or more.

Their message? Don’t panic. Get perspective. Stick with the plan.

What Exactly Is a Bear Market?

A bear market is defined as a 20% drop in stock prices from recent highs. It’s more than just a blip—it’s a sustained downturn that often triggers fear and uncertainty.

But it’s not rare. Bear markets happen roughly every four to five years. They’re part of the normal cycle of investing.

As Archie puts it, “What’s unusual isn’t the bear market—it’s investors staying calm and following their strategy through one.”

What Should You Do in a Bear Market?

Rob and Jimmy outline the practical, proven steps that long-term investors can take during downturns:

  • Start with your financial plan. If your strategy was built well, it already accounted for market dips. Now is the time to lean on it—not abandon it.
  • Adjust your spending temporarily. Consider postponing large purchases or extra travel. Small lifestyle shifts can preserve liquidity without sacrificing your future.
  • Stick with your allocation. Your investment mix was designed for both bull and bear markets. Let it do its job.
  • Rebalance if needed. A drop in stock prices may mean you’re underweight in equities. Buying low through rebalancing could enhance future returns.

What Should You Avoid?

Bear markets tempt us to act—but often, action makes things worse. Here’s what to resist:

  • Panic-selling: Locking in losses by moving to cash may feel safe—but it prevents recovery.
  • Trying to time the market: You’d need to get three things exactly right—when to get out, when to get back in, and when recovery begins. Even professionals rarely do this consistently.
  • Stopping contributions: Continue funding your 401(k) or IRA. Lower prices mean you’re buying more shares—something you’ll thank yourself for later.

Why Missing the Best Days Can Derail Your Plan

According to JP Morgan, missing just 20 of the best market days over a 20-year period can slash your average annual return from over 9% to under 3%. And here’s the kicker: the best days often occur right after the worst ones.

If you’re out of the market during recovery, you may never catch up.

Ask Yourself:

  • Is my current plan built to handle down markets?
  • Have I let headlines shape my strategy?
  • Am I acting based on fear—or following a long-term process?

Final Thought

Bear markets feel uncomfortable—but they don’t have to destroy your financial future. With a steady hand, a smart strategy, and a bit of patience, they can become a powerful opportunity—not just a threat.

Worried about the market?

Grab our Bear Market Survival Guide to help you navigate downturns without panic—or schedule a conversation with our team at www.hoxtonpm.com/schedule to review your plan.
Download the Guide
Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, and CFP® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.