You and I are living through a severe bear market for growth stocks. Half of the NASDAQ is down over 50%. The biggest gainers have become the biggest losers. Your account is probably down more than the S&P 500. I know, because mine is too. Things suck right now.

We’re saving up for something very important in our lives: financial freedom.

Freedom from working forever. Freedom to own a bigger home (or have a smaller mortgage). Freedom for our kids from student loans. We expect everything we save today to help us tomorrow. Pullbacks take us further from that goal.

Although we’ve never lived through something like this, that doesn’t mean it’s never happened before. When you’re young, everything is unprecedented.

via GIPHY

The last Nasdaq blowup like this was in 2000-2001, the dot-com bomb. If you were born after 1975, you (probably) didn’t have any skin in the game at that time.

While this market may be a new experience for us, we can take clues from the past about a successful mindset and how this plays out:

Pullbacks are a regular (but painful) part of investing

Market history tells us to expect a 15% drop every year or so and a 30%+ drop a couple of times per decade. The reasons will vary. What’s important is expecting them

No bear market has ever been permanent

This too shall pass. It always has

It’s a great time to be a young saver

Bear markets are a blessing if you’re able to buy stocks. It’s when you get the best prices and highest appreciated share lots. Think of it like a discount: The S&P 500 is 20% off right now. It sounds counterintuitive, but lower prices today could mean higher gains down the road.

Diversification is your friend

High-flying growth stocks got wrecked. But the S&P 500 is down roughly 20%. Diversifying says “I don’t know which stocks will do best”; it’s an act of humility (and protection).

Some stocks will rebound, but it will take time

The future is (probably) on sale. The dot com bust proved to be a great time to add some tech stocks. From 2001, Microsoft and Amazon took 15 years to re-reach their all-time highs, but gains from the lows were historic.

With so much wreckage in today’s market, there are bound to be some “obvious in hindsight” great deals around.

Many stocks will not rebound

If you’re holding some big losers, go back to fundamentals. Evaluate the business itself. Several companies dropped over 80% because they aren’t profitable, and never will be. Pets.com and Webvan, are two that come to mind from the tech wreck.

Due diligence is key when investing. Learn from the experience.

The time to re-balance your asset allocation is not during a crash

If you found out your account makeup was too aggressive, make a note, but wait to rebalance after it recovers. Volatility works in both directions. Selling stocks funds while they’re down can turn a temporary loss into a permanent one.

Hanging in there is the best chance you have of breaking even.

“Investing is easy” is a thing of the past (again)

Crypto, Electric Cars, meme stocks and non-profitable “disruptive” stocks were the easiest game in town until they weren’t. To Quote the 80’s movie, Cocktail: “All things end badly, or else they wouldn't end.”

At least this Thanksgiving we won’t have to hear about the latest memecoin from a distant cousin.

Identify where we are in the cycle of fear & greed

There are a dozen types of bears in nature, and bear markets have their differences as well. One thing that’s constant, however, is human behavior. Timing the markets is impossible, but we can take clues about what stage of the cycle we’re at through the enthusiasm of the public: