A bear market is commonly defined as 20 percent below its last record high. The term can be used to define performance of other broad market indexes as well as individual stocks.

What’s an individual investor to do in the midst of this financial mayhem and how long can we expect it to continue? Two academic experts, Leah Hartman, chairwoman of the Accounting, Finance & Marketing Department at the University of New Haven and Eric McAlley, an assistant teaching professor of finance at Quinnipiac University, offered their recommendations on how the average investor can protect themselves.

Q: When can we expect the steady and prolonged decline of financial markets to come to end?

McAlley: “I feel like we have a ways to go in terms of more downward pressure on stocks. Normally, the Federal Reserve would be able to take some steps that help out. But right now, the Federal Reserve is pulling back money in order to reign in inflation. Reducing inflation over the long term will help us, but in the short term, it limits what the Fed can do.

Hartman: I think market volatility will be with us through the summer month at least and maybe even through the mid-term election. It’s going to take a while for the Federal Reserve to reel in the purchasing that drives inflation.

Q:If you could only offer one piece of advice to those with 401(k)s, what would it be?

If you are comfortable with, have a global outlook about stock in companies outside the U.S. But if you do, choose a fund manager that has experience in a particular market.

McAlley: I don’t think anybody should be 100 percent in stock. If you have an investment professional you work with, make sure the long term investment allocations you have are proper based upon your goals where you are in your life.

Q: What’s the biggest mistake the average investor can make?

McAlley
: For most people, they probably shouldn’t do too much other than assess their investment allocations. For example, somebody who is closer to retirement should be including more short-term investments in their portfolio.

Hartman: You shouldn’t panic especially if you don’t need the cash tomorrow. Stay the course, it’s going to be volatile for a while. Pick quality companies and above all, do your homework. There is so much information that is out there and a lot of it is free.

luther.turmelle@hearstmediact.com

This content was originally published here.

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