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What To Hold If You're Afraid Of An Upcoming Bear Market

Nov. 03, 2017 11:44 AM ETJohnson & Johnson (JNJ)YUM64 Comments
Aristofanis Papadatos profile picture
Aristofanis Papadatos


  • Bear markets cause traumatic experiences to investors.
  • Too many investors have missed the exceptional bull market due to their fear of an imminent bear market.
  • In this article, I recommend two holdings, which are likely to offer attractive returns even in the event of a bear market.

Bear markets cause traumatic experiences to investors. This is particularly true for the last bear market, in 2008, which devastated many investors, particularly those who entered their retirement phase with lack of ammunition. As a result, too many investors have remained on the sidelines and have thus missed the exceptional ongoing 8-year bull market. As it is a shame to miss a bull market due to an abstract fear of bear markets, in this article I will analyze what holdings investors can have in order to profit from the ongoing bull market while also being protected against a potential bear market.

First of all, the current bull market is the second-longest in history and most stocks have thus become overvalued or at least fully valued. Therefore, it is only natural that most investors are afraid that the next bear market may be just around the corner. Nevertheless, this fear has been prominent for years and hence many investors have missed the excellent returns that the market has offered in recent years. Moreover, while a bear market will eventually show up, no-one can predict its time of arrival. Consequently, the best approach is to remain invested to reap the excellent long-term returns of the market but only own holdings that will perform well even in the event of a bear market.

As interest rates have remained near record-low levels for almost a decade, many investors have resorted to dividend aristocrats for their reliable and growing dividend. Unfortunately, due to their attractive dividend yields, most dividend aristocrats have become markedly overvalued. To be sure, most of them are mature companies that have minimal growth rates and currently trade at P/E ratios above 20. For instance, Coca-Cola (KO), Wal-Mart (WMT), Procter & Gamble (PG) and Colgate-Palmolive (

This article was written by

Aristofanis Papadatos profile picture
I am a chemical engineer with a MS in Food Technology and Economics. I am also the author of 2 mathematics books ("Arithmetic calculations without a calculator" and "Word Problems") and perform almost all the calculations in my mind, without a calculator, making it easier to make immediate investing decisions among many alternatives. I invest applying fundamental and technical analysis and mainly use options as a tool for both investing and trading. I have nearly achieved my goal of early retirement, at the age of 45. In my spare time, I follow Warren Buffett's principle: "Some men read playboy. I read financial statements".

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I am long YUM bonds.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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