Keith Fitz-Gerald

5 Secrets for Bear Market Investing

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... This approach to bear market investing enables you to stay invested alongside the smart-money crowd by keeping some skin in the game at all times.

That's really not a surprise, given that the big-money players are concentrating on the companies that focus on such key global plays as energy, natural resources and worldwide infrastructure.

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Not only are many of these "global titans" increasing earnings despite miserable market conditions, but they're actually building market share and focusing on powerful trends that will take decades to play out and that will generate trillions of dollars in profits along the way.

After all, the global markets truly reward the companies that make the world "go 'round."

THE 5 KEYS TO MAKING BEAR MARKET PROFITS

Now that we're in the midst of a new bear market, here are the five secrets that will pave the way to bear market profits:

1. Don't Try to Catch a Falling Knife

The first bad news is never the last, as so many investors found out when the Internet bubble imploded in 2000 and quickly eradicated $14 trillion of wealth. If the fundamentals don't match up with the stock's price, don't buy.

2. Don't Overpay

One of the biggest miscues bear market investors make is in concluding that certain stocks are a bargain simply because they've traded down to historic lows.

It's better to consider "tangible book value." The reason: Tangible book value represents what a shareholder can actually expect to receive if a company turns turtle; it's a good measure of what the firm's real assets are worth.

So, at a time when earnings are decelerating -- or have vanished completely -- buying companies that are trading below tangible book value ...