How Gen Z Traders Can Enter A Bear Market And Leave Riding A Bull

By Jordan Edelson, CEO and co-founder, TradeZing

Retail investing has never been easier. Individuals now have the ability to execute trades at their fingertips - anytime, anywhere. Despite its widespread availability, multiple factors, like inflation, the Russia-Ukraine conflict, supply chain shortages and domestic issues, are creating much uncertainty and putting markets in a time of flux. These factors, coupled with the realization of how correlative the cryptocurrency market is with the U.S. stock market, are intimidating for young investors who are eager to learn how to trade and uplevel their returns but are not sure where to get started.  

However, a majority of the existing market educational content is dry and boring or behind expensive paywalls which does not resonate with the next generation of investors. Entering a volatile market without much experience or knowledge can make or break an investor’s financial future. To successfully navigate these new challenges, investors must play the long game, do their due diligence and take the right risks.

Play the Long Game

While indices might decline in the short term, the market has always proven to be up and to the right. 

Gen Z investors have time on their side and will benefit from a long-term approach. As markets are intentionally cooling down, businesses in the tech sector and startups are tightening their belts. Gen Z and Millennials will feel this impact not only in their portfolio, but also in their careers for the next few years, causing everything to feel tight and in an economic period of mass uncertainty.

Using time to their advantage, Gen Z and Millennial investors should also consider saving money during these volatile times. However, spot opportunities for alternative investments might appear during this time, emphasizing the importance of staying educated and understanding risks before making an investment decision. 

Due Diligence is Key 

The rise of meme stocks and the GameStop short squeeze in 2021 exemplified why the get rich quick mentality is not sustainable in today’s markets. However, this phenomena did give rise to investor communities - whether on Reddit, Dischord, Facebook or other social media apps, individuals could connect with other people to discuss market trends and which tickers or coins should be watched. While the social aspect of retail trading is clearly here to stay, investors must do their due diligence on who they are taking market advice from and whether an investment is good for their portfolio.

It’s important to keep in mind that with all the information available to investors online, it’s necessary to be extra diligent and have a clear understanding on who is giving you advice. There is no quick path to outsmart the markets so if a suggestion is too good to be true, it likely is. Knowing the source of any advice and investing in oneself through various forms of education will be instrumental in becoming a successful trader. 

Although these sources can be helpful in understanding the markets, potential investors need to stay up to date on the latest trends when making a final investment decision. Sound advice one day may be a bad tip the next. Taking extra time to research previous market trends and whether this investment makes sense for you will go a long way when navigating uncharted market territory. Understanding your investments and not just throwing money at the next big coin or NFT is essential for long term gains. 

Taking the Right Risks 

Investing is always risky with the potential for mass profits or total wipeout. The markets are still a gamble today - with crypto volatility and stock fluctuation, and more expected in the near future, traders must analyze their risk and make smart investments. Playing it safe is a great way to first enter this environment, holding onto a “rainy day fund” so you won’t miss out on future prospects. 

Changes in today’s market are happening minute by minute, so even if traders are staying up to date on fundamentals, regulatory shifts and researching a company’s record and revenue goals, they may find the short term growth quite pessimistic. Still, it’s important to remember there will be pops of activity and a number of opportunities in a bear market that will eventually lead to long term growth. During these unprecedented times, many investors will experience major economic losses for the first time. However, those who consume educational content and invest in financial literacy will future proof their earnings and exit this downturn riding a bull.