By Jill Schlesinger
March 8, 2016

Seven years ago Wednesday, U.S. stock markets plunged to a bear market low. On March 9, 2009, the Dow landed at 6,547, its lowest close since April 15, 1997. ; the S&P 500 fell to 676, its lowest level since Sept. 12, 1996; and the NASDAQ was at 1,268, its lowest level since Oct. 9, 2002.

Markets have charged higher since then, of course. But with recent volatility and market corrections, now seems like a perfect time to review those painful bear market lessons.

Buckle in: In a bear market, fear can lead you to sell at the wrong time — prompting you to sell low after buying high, and take unnecessary overall portfolio losses. Accept that there will be corrections and yes, painful bear markets. And while those downturns are tough on the nerves, if you are still in accumulation phase, you can take solace in the fact that you are buying shares that will, eventually, be seen as being on sale.

Have reserves: Desperation can have the same effect as fear. Those who entered the financial crisis (and ensuing bear market) with adequate emergency reserves, however, were able to refrain from selling assets at the wrong time, invading retirement accounts, or a combination. Be sure you have six to 12 months of expenses set aside. For retirees, who might be dependent on their portfolio assets, try to have up to two years of expenses in cash.

Don’t take dumb risks: Given that the last bear market was catalyzed by a housing boom and bust, another great lesson is that just because some bank is willing to lend you a lot of money to purchase a home, that does not mean that you should take it. Similarly, don’t get yourself in debt over your head, don’t count on rising housing prices to wipe out your debt, and do make sure that you understand the terms of any loans that you are assuming.

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