DO NOT LIVE IN FEAR OF A BEAR MARKET

With the stock market being up for the past couple of days, it is perhaps inevitable that we begin to see more headlines about a coming bear market.  Of course we all know as investors that bear markets occur, but we should not live in fear of a market correction.  Accept it as part of the investment process and realize the reality of the overall market, sometimes it's overpriced and sometimes it's undervalued, and then you begin to see the opportunities provided by bear markets.

As a dividend investor, one thing I know for sure is that dividend stocks tend to be less volatile in market corrections than growth stocks.  People are a lot less likely to sell stocks if they know they will be getting a cash payout in the near future, thus their prices tend to hold up better when the market heads south.

Another thing I've noticed in bear markets, although stock prices may decline there are many companies that remain profitable and continue to pay dividends, but with lower per share prices the yield on these stocks increase, sometimes dramatically, as their prices fall.  Granted in hard times, like we've seen in the recent past, some companies may cut dividend payments to reserve capital, but a lot of them do not.  I've found this to be a good time to pick up bargains on stocks that I've wanted to own, but thought were overpriced compared to returns. 

Some may argue that if you invest during declines it may be years before stock prices recover, which is true, there's nothing guaranteed about the stock market.  But even if that turns out to be the case, if you're investing for dividends price becomes less of an issue since you're more concerned about the payouts you receive in the form of dividends.  When stock prices do eventually recover, that's just icing on the cake.